A Secure 8%
Retire on dividend income alone – AND keep your capital fully intact. Here’s how.
Fellow Income Investor,
The stock market is looking toppy, which is terrible news for “buy and hope” investors. Those that rely on higher and higher share prices are justifiably nervous these days.
However a “dividend-only” retirement is challenging as well. Yields still haven’t been this low in decades!
The S&P 500 pays a measly 1.9% today. If you have a million dollar portfolio, that’s a lousy $19,000 per year in income. Pathetic.
In a moment, we’ll discuss how to get you a 400%+ raise and earn an 8% yield instead of 1.9%. That’s $80,000 in passive income on a million bucks, or $40,000 annually on $500K. But first, let me show you the logical – but wrong – assumption that most mainstream dividend investors make.
They look at a “consumer staple” like General Mills (GIS), see it paying a “generous” 3.8%, and think it’s a good buy. Problem is, anyone who bought this “safe” stock early last year has suffered a 15% price decline:
The “first level” investors are relying on the wrong chart for investment income.
For example, check out these two charts. Which would you rather rely on for dividend income?
Of course the chart on the right. It’s increased steadily for the past 10 years with no blips. It represents the dividends paid by Johnson & Johnson (JNJ), while its cardiac companion on the left is the price of JNJ’s stock over the same period.
Problem is, you’re probably buying the manic chart on the left today. Which means you’re exposing yourself to short-term price risk to collect a 2.7% dividend.
There are two issues with this approach. First, you’re putting your retirement portfolio in the way of a potential stock market crash (which will take down JNJ too) in order to collect the income it pays investors. Which brings me to the second – and much bigger – problem.
You’re risking a lot for a stingy 2.7%!
Even if you buy $1 million worth of JNJ, you’re only collecting $27,000 in income annually. That’s less than your neighborhood Starbucks barista earns.
How about these two charts – which would you rather own?
The chart on the left is the stock price of Microsoft (MSFT) for the past decade. Investors who bought and held the entire time did fine, of course – and also enjoyed the steady dividend growth on the right. In fact, they’re now earning a 7.5% yield on their initial investment – nice.
But what if you didn’t buy Microsoft a decade ago? Then you’re faced with the same dilemma on where to put your “new money” to work for income. After all, MSFT only pays a 1.5% yield today.
And Other Blue Chips Aren’t Any Better
It’s not a matter of aristocrat-picking prowess. Let’s take four more blue chip “dividend aristocrats” – Kimberly-Clark (KMB), McDonald’s (MCD), Sysco (SYY) and Wal-Mart (WMT). Their best growth days are behind them, though you’d never know it looking at their valuations. Here are their sales and dividend growth over the past five years, along with their current price-to-earnings (P/E) ratios and paltry yields:
Sadly this 4-stock aristocrat portfolio only pays an average 2.4% yield today – which means a $1 million portfolio will only earn you $24,000 in dividend income annually invested in these shares. Let me repeat.
A $1 million portfolio will only earn you $24,000 in dividend income annually invested in these shares.
A million bucks won’t even get you Bernie Sanders’ $15 minimum wage in retirement. How sad.
The solution that financial advisors pitch is a “4% withdrawal rate”. These guys (who have not successfully retired yet themselves, by the way) say that you should supplement your dividend income by withdrawing 4% or so annually from your capital basis. Sounds good on paper but it’s often bad news in reality due to some disastrous market math.
The 4% Withdrawal Flaw is
Reverse Dollar Cost Averaging
Here’s the fatal flaw with the 4% annual withdrawal strategy for retirement. Every few years, you’re faced with a chart that looks like this:
You’re forced to withdraw money at exactly the wrong time. The dividend is fine, but you need to sell shares for additional income. Remember the benefits of dollar cost averaging that built your retirement portfolio? This is the same phenomenon, but in reverse!
With a 4% withdrawal portfolio, you sell more shares of stock when prices are low, and less when prices are high. Not good – it’s actually a recipe for running out of money.
If you’re worried about a stock market pullback or crash – and I don’t blame you with equities near record-high valuations – then we need to transition your portfolio away from the casino of stock prices into the steady staircase of dividends.
Look, it’s not your fault that the Fed crushed savers by lowering interest rates to the basement. If you were preparing for retirement in any normal era, you’d have some legitimate options in fixed income.
But this is the “new normal” where rates may be slowly on the rise, but they’re likely to be low for a long time. So it’s Wall Street to the rescue with its magic 4% rule – the notion that you can and should draw down a portion of your portfolio every year after you retire. A recipe for disaster.
The secure solution? Step beyond Wall Street’s “blue chip BS ” and create a portfolio that can actually generate meaningful income. Ditch the aristocrats that pay you like you’re making lattes for a living, and secure yourself a 2-3X pay raise while still keeping your capital intact to boot.
The 8% “No Withdrawal”
The proper solution is one you’ve probably thought of – a no withdrawal portfolio that relies entirely on dividend income and leaves your principal 100% intact. But again, the dilemma is that a million bucks in most dividend aristocrats won’t get you enough dividend income to live off of – unless you have significant capital.
Alternative retirement products such as single premium immediate annuities (SPIAs) can help exchange capital for income streams – but in most cases you are giving up your principal while you are charged outrageous fees. These vehicles usually don’t account for cost of living increases. And you’re trading in your legacy – and your grandchildren’s inheritance.
“Dividend income sounds great,” you’re probably thinking. “But don’t stocks only pay gaudy yields like these at the depths of bear markets?”
That’s partially true – blue chips tend to only pay yields of 5% or better near secular stock market bottoms. However there are three other stock market vehicles available today that pay reliable yields of 6%, 7% and even 8% or higher.
I’m talking about investment vehicles that have market caps between $1 billion and $3 billion. They’re plenty liquid enough for you and me, but not for the big institutional investors that hold two-thirds of all shares in public stocks. Combined they make up only a fraction of the stock market’s total capitalization – so they don’t get much coverage from the financial media.
And that makes these ignored corners of the financial markets ideal places for us to search for high yields. Now like any sectors there are good investments and bad investments, of course. So let’s talk about these areas – and how to employ a contrarian approach to find the best values, which I define as secure meaningful yields with price stability and even 7-15% upside in many cases.
In a moment, I’m going to show you how to earn a passive $40,000 on a half-million… $80,000 on a million… and $100,000+ annually on anything higher. Plus, you won’t even have to tap your initial capital or “draw down” any of your valuable principal. I’ll even give you the specifics on stock names and tickers to buy. But first, a bit about myself.
My name is Brett Owens and I’m an unabashed dividend investor. Ever since my days at Cornell University and all through my years as a startup founder in Silicon Valley, I’ve hunted down safe, stable, meaningful yields.
For the last 10 years, I’ve been investing my startup profits and finding 6%, 7%, even 8%+ dividends with plenty of double-digit gains along the way. In recent years, I started writing about the methods I use to generate these high levels of income.
Today I serve as Chief Investment Strategist for Contrarian Income Report – a publication that uncovers secure, high yielding investments for thousands of investors. Since inception my subscribers have doubled up the S&P 500 with annualized gains of 20%, largely thanks to an 8% average yield!
Of course not all high yield investments are buys. Some vehicles are nothing more than dividend traps, paying high stated yields that are simply not sustainable.
But if you know how to navigate the space, you can earn the types of returns and collect the big dividends that my subscribers do – which means you may never have to tap into your retirement capital to pay your bills.
Now let’s talk about three ignored corners of the financial market I want to introduce you to for secure 8% income…
“No Withdrawal” Stealth Play #1
As I mentioned earlier, if you feel trapped “grinding out” dividend income with classic 3% or 4% payers, you can double your payouts (or better) immediately by moving to closed-end funds, or CEFs. In fact, you can often make the switch without actually switching investments.
For example, JPMorgan Chase (JPM) investors can potentially trade in their 2.9% dividend yields for the Gabelli Dividend & Income Trust Fund’s (GDV) 6.4% payout. JPM is GDV’s largest holding amongst a list of blue chip payers plus dividend growers like Wells Fargo (WFC) and Verizon (VZ).
Superstar money manager Mario Gabelli runs his namesake GDV. He combines his yields with growth and leverage to create his outsized yield – which he delivers investors every month, to boot.
Sounds like a sweet deal, right? His investors get the benefit of a legendary money mind along with his access to ideas and cheap money.
And there are funds that deliver even more “alpha” than GDV – which means they pay more, and offer more potential upside. I’ll highlight three of my favorite plays in this space in a moment.
It is bizarre that many first-level investors spent much of the last few years running away from closed-end funds, claiming that their “free leverage lunch” is nearing an end with higher rates on the horizon. Plus, they say these funds are going to see more competition from other fixed income assets looking increasingly attractive, making them less so.
The result? Many funds are selling at bargain prices today thanks to the headline worry that higher rates hurt CEFs. But that’s just not true.
Libor – the rate CEFs borrow money at – is tied closely to the Fed funds rate. And the last time the Fed hiked its significantly, CEFs did just fine.
In June 2004, Fed chair Alan Greenspan began boosting rates from then-historic lows. Over a two-year period, he increased the federal funds rate from 1% to 5.25%. An earthquake.
How’d CEFs perform? Three prominent funds – Gabelli’s along with the Calamos Strategic Total Return (CSQ) and the Eaton Vance Limited Duration Income Fund (EVV) – all outperformed the market during this 2-year span!
Higher Rates No Problem for Top Closed-Ends 2004-06
And wait ‘til you see the three closed-end picks I have for you. These “slam dunk” income plays pay dividends as high as 9.1%.
Plus, they trade at steep discounts to their net asset value (NAV) today. Which means they’re perfect for your retirement portfolio because your downside risk is minimal. Even if the market takes a tumble, these top-notch funds will simply trade flat … and we’ll enjoy those yields up to 9.1%.
Most likely, they’ll jump 10% to close the “free money” discount … and we’ll still collect those fat dividends!
I’ll share the details on my three favorite CEFs in a minute – but let’s get into our next strategy.
“No Withdrawal” Stealth Play #2
Not familiar with preferred shares? You’re not alone – most investors only consider “common” shares of stock when they look for income. These are the shares in a company you receive when you place an order with your broker – like the blue chips we discussed that pay just 2.4% today.
Not long ago, Wells Fargo (WFC) announced plans to offer $1 billion in preferreds with a 6% perpetual coupon. That’s more than double the stock’s current yield. If you’re looking for income, and you believe that Wells Fargo is in good financial shape, then the preferreds will pay you 6% as long as you own them.
Now I’m not recommending ETFs like the PowerShares Preferred Portfolio (PGX) and the iShares S&P U.S. Preferred and Income Securities ETF (PFF). I believe they expose investors to unnecessary credit risk. The only way you lose with this vehicle is by giving your money to a driver who crashes your car. But the S&P 500 and NASDAQ are large enough that there’s usually a company financially crashing into a brick wall at any moment in time.
That’s why I recommend moving past a broad-based ETF in favor of a fund with an active manager working for you.
And I have a favorite today that pays a rock-solid 6.9%. It’s a great bargain right now. Headline-driven investors had worried that rising rates would hurt their portfolios, so they mistakenly sold these high quality issues.
Their concerns were misguided – not only because their rising rate worries were overblown, but also because this fund holds the majority of its bonds in floating rate issues anyway. This means that even if interest rates do rise, these coupons will adjust upwards. And the current “low rates for longer” environment means that preferred shares look great with respect to most other fixed income options.
I’ve got the details on my favorite investment vehicle in a special report that I prepared for you about preferred shares. I’ll show you how to get your copy of my analysis in a minute – right after we talk about the third pillar of my contrarian income strategy.
“No Withdrawal” Stealth Play #3
How about two REITs paying up to 8.9% that are set to rise in the months and years ahead?
The IRS lets real estate investment trusts, or REITs, avoid paying income taxes if they pay out most of their earnings to shareholders. As a result these firms tend to collect rent checks, pay their bills and send most of the rest to us as a dividend.
REIT investors also benefit from the tax breaks that “pass through” businesses will receive in the new code. Investors are now able to deduct 20% of their REIT dividend income.
Interestingly, REIT income would be taxed at a lower rate than regular rental income (which would not receive the deduction). Which means if you don’t have a burning desire to change light bulbs and play landlord yourself, it will be cost-effective to simply sit back, make a few clicks and buy real estate stocks instead of physical properties!
The result is higher payouts than the broader market. The Vanguard Real Estate ETF (VNQ) pays 3.9% today, more than double the S&P 500.
REITs are finally starting to get the respect they deserve – Standard & Poor’s recently gave REITs their own sector for the first time.
Which means there’s a lot of money chasing REITs now, but the first wave of capital is blindly piling into the lone ETF in the space according to Barron’s. Reason being, most of these “first-level” investors and money managers don’t know the individual names that well.
As a result, they’re piling into the blue chips owned by this ETF and missing the true hidden dividend gems in the space. Soon enough they’ll smarten up and start throwing their billions into the real values – like my favorite commercial landlord which yields 7%.
This well-connected commercial real estate lender lets us play Monopoly from the convenience of our brokerage accounts. They do all the legwork, building a secure, diversified loan portfolio featuring offices, retail space, hotels and multifamily units.
Management then collects the monthly payments, deposits the checks – and then it sends most of the profits our way as dividends (a requirement of its REIT status).
The stock’s current dividend (a 7% yield today) is covered by earnings-per-share (EPS) today. And don’t be fooled by the stagnant dividend (not that stability is bad). The firm continues to originate an increasing number of loans:
42% Portfolio Growth Today Tees Up Dividend Growth Tomorrow
This firm is a conservative lender with stellar loan performance. Its growing portfolio will drive higher profits, which in turn will inspire the next dividend hike. The best time to buy the stock is right now, as it makes the investments which will drive its payout and share price higher from here.
Plus this firm has also smartly eliminated interest rate risk because it uses floating rates to protect against downside, and make more money if interest rates move higher:
More Income If Interest Rates Rise
Same for another REIT favorite of mine that pays an astounding 8.9%.
But this mortgage REIT (mREIT) doesn’t own buildings, it owns paper. Specifically, they buy loans and collect the interest – and they make money by borrowing short and lending long.
This business model prints money when long-term rates are steady or, better yet, declining. When long-term rates drop, these existing mortgages become more valuable (because new loans pay less).
Of course, the traditional mREIT’s gravy train derails when rates rise and these mortgage portfolios decline in value. Historically, rising rate environments are challenging for mREITs, but this one is primed for any moves in rates from here–higher, lower or steady.
The firm’s overall mortgage assets are a well-diversified portfolio that includes loans, MSRs (mortgage service rights) MBS (mortgage-backed security) holdings and credit risk transfer (CRT) securities.
Some of these buckets benefit from falling rates, while others run higher when rates rise. It’s a well-hedged asset portfolio that makes money no matter what the Fed does next:
To show you what I mean, the chart below shows the recent mortgage rate rollercoaster (which is the difficult-to-predict blue line) laid alongside this firm’s profits-per-share (the steadily climbing easy-to-predict orange line):
Heads or Tails We Profit
Profits have more than doubled in just two-and-a-half years and the company is now likely to raise its dividend in the near future!
Fortunately, most investors and money managers haven’t taken the time to understand how this REIT generates its profits today. They put it in the “too hard” pile because they’re lazy.
This mREIT should be owned by any serious dividend investor for three simple reasons:
- Its diversified portfolio is set to profit no matter what the Fed does next,
- It pays a rock-steady 8.9%, and
- Has the potential to grow its dividend over time.
Now let’s discuss how you can get a hold of my complete No Withdrawal Portfolio research today, along with stock names, tickers and buy prices.
An Average 8% Yield, With Upside
It’s only a matter of time before other investors ditch their paltry 3% and 4% payers and find their way over to these “slam dunk” income plays, so the time to buy is now, while they still trade at deep discounts to NAV and FFO.
That’s why I’ve prepared three in-depth guides, outlining each of the strategies I mentioned above…
Special Report #1
The first is called the “Monthly Dividend Superstars: 8% Yields With 10% Upside.”
Inside you’ll find the ticker symbol, my buy-up-to price and in-depth backstory on each of my three favorite CEFs, including:
- An 8.1% payer that’s set to rake in huge profits from an artificially depressed sector,
- The brainchild of one of the top fund managers on the planet that pays an incredible 9.1%,
- And a rock-steady 6.9% dividend trading at a massive discount to NAV.
Special Report #2
The second guide is called Preferred Shares: Looking Past Common Dividends for 6.9% Income.
Inside you’ll find my favorite fund for investing in preferred shares, along with its management profile and investing strategy.
The fund pays a rock-solid 6.9% today. The high yield is great, but its best quality may be its lack of correlation with the broader stock market. The shares this fund owns are preferred in every sense of the word – meaning it gets paid its fat dividends no matter what the broader market does.
Special Report #3
Finally your third guide, Recession Proof REITs: 2 Plays With 7%+ Yields and 25% Upside, will discuss my two favorite REITs. They include:
- The 8.9% payer uniquely positioned to thrive in the current interest rate environment, and
- A 7% payer that recently expanded its portfolio by a whopping 42%!
In each report you’ll get the rationale behind where, why and how to profit. In short, everything you need to know about these stocks before you invest a single penny.
How to Get All 3 Reports Absolutely Free
To access all three reports, Monthly Dividend Superstars, Preferred Shares and Recession Proof REITs at no cost whatsoever, I simply ask that you take a risk-free trial of my research service, Contrarian Income Report.
I created Contrarian Income Report to help self-directed investors uncover overlooked and under-appreciated income plays before Wall Street and the mainstream herd bid them up.
Right now, there are 20 high-yield stocks and funds in our CIR portfolio, and you get instant access to each one the moment your no-risk trial starts.
PLUS you’ll get my next 2 NEW monthly issues.
Every new investment you get in Contrarian Income Report comes with a simple guarantee: it will pay SAFE 6% dividends—or better.
And 4 holdings in our portfolio go way further than that, delivering up to 9%+ income right now.
So just by “swapping out” your blue chips for these high-powered dividend stars, you could double, triple—or even quadruple—your income. And you could do it TODAY!
But don’t take my word for it. Here’s what some of my subscribers have to say about these recommendations:
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But that’s not all, because…
Safe Yields Are Only the Beginning
In addition to my favorite REITs with yields up to 8.9%, the closed-end funds paying up to 9.1%, and the 6.9% Preferreds, your risk-free trial includes a whole lot more …
- You’ll have immediate access to all of the picks in the members-only portfolio, including my exact buy & sell recommendations and buy-under prices.
- Get new income investing ideas on stocks I’ve been watching and analysis of major market events delivered straight to your inbox every single week.
- Never worry about missing out on breaking news on our portfolio stocks. I’ll have an eye on all of them 24/7 and will send a flash alert right away if there’s ever any change in our position.
- On the first Friday of each month, you’ll receive my monthly research bulletin, including new portfolio additions, updates on existing positions and an overview of trends and events that may affect our holdings.
- Day or night, you can always log into our password protected members-only website to access all of our resources, archives, special reports and the full portfolio.
- Each quarter, you can join me for a live, members-only webinar, where we’ll run through the latest news on current portfolio recommendations and I’ll personally answer member questions.
- If you ever have questions about your subscription, you can email our customer service team anytime, or call our New York office during regular business hours without waiting on hold or navigating those annoying phone menus.
- You won’t need to spend hours in front of a computer screen researching stocks. I’ll take care of all the work and send out new recommendations as they become worthy of your investment dollars, as well as keep you up to date on our existing holdings.
Now, the regular member price to join Contrarian Income Report is $99 per year.
With everything that’s included I’m sure you’ll agree it’s well worth the cost. Heck, the three reports you’ll get absolutely free are worth three times that much.
And even a small position in any one of the picks mentioned above will easily cover that in just the first few months.
Imagine 7%, 8%, even 9% dividends rolling in from these picks, and then watching them appreciate as mainstream investors realize what they’ve been missing and inevitably pile back in.
But it’s important that I earn your trust and you have the chance to see exactly how profitable this service can be.
So I’ve arranged for a small number of investors to take 60% off the regular price and try out Contrarian Income Report for just $39.
And to ensure you have no reason not to try this service out, I’m going to include two more bonus reports just for giving it a shot…
Bonus #1: The Dirty Dozen: 12 Dividend Stocks to Sell Now
High yields can be a warning sign of a stock in trouble.
Just ask the investors who chased the high yields of RadioShack.
The company started to hike their dividends to 6%…8%…and even double digits and investors piled in, tempted by the mouth-watering payout promise.
Then July 2012 rolled around and the company stopped their payments. And their stock got caught in a death spiral before they finally declared bankruptcy.
Let me tell you … it wasn’t pretty for anyone who stuck with them.
It’s easy to spot this tragedy in hindsight, but when it’s unfolding, people have their blinders on and they’re sticking with their stocks because of the dividend.
And in this report, I’ll reveal 12 popular income stocks you should dump right now.
Next, you’ll get your very own copy of my personal playbook…
Bonus #2: Second-Level Investing: Your Guide to the Contrarian Money Machine
Many super-investors agree that you’ll never beat the market by following the herd. They tout the virtues of contrary thinking, but I’ve yet to hear any one of them specifically outline how they go about finding under-appreciated stocks with low valuations.
And that’s exactly what you’ll get with this step-by-step contrarian guide.
For the past decade I’ve been refining a system that identifies and selects the top contrarian candidates for investment. By following these steps, you’ll be able to find the types of stocks that Warren Buffett, George Soros, Howard Marks and many other greats only wish they could invest in.
Now, there’s just one more thing I’d like to include…
Our Ironclad 100% Money-Back Guarantee
I’m so confident you’ll enjoy (and profit from) this service that I’m going to give you 60 days to try Contrarian Income Report absolutely risk-free.
Here’s how it works…
Start your membership today. Download your special reports, read the latest issue and start tracking a few winners in the portfolio that catch your interest.
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In the coming months, many investors will struggle to get by on their paltry 2% and 3% payers, holding their breath for the next signal from Washington on the state of the economy, fearful of what might happen in China & Europe.
But my Contrarian Income Report readers and I will rest easy thanks to our super-safe “No Withdrawal” portfolio and enjoy 8% dividends with 10-20% gains (or more!) over the next 12 months.
Are you going to join us?
Yours in profits,
Chief Investment Strategist
Contrarian Income Report
P.S. Since my recommendations are contrary to prevailing popular beliefs, they have a habit of rallying quickly as soon as the mainstream herd catches on to what they’ve been missing. I encourage you to get started right now so that you can get in at a good price!
P.P.S. Remember, your risk-free membership comes with the names and full details on my top 3 closed-end funds paying up to 9.1%, dividends up to 8.9% from my top REIT plays, and the Preferred fund that will hand you 6.9%. Even a small position in any one of these recommendations will easily cover a full year’s membership… most likely before your 60 day trial even ends!
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