Many people spot a closed-end fund (CEF) with a high dividend, a double-digit discount and a big recent price gain and automatically hit the buy button, thinking they’ve got a clear winner on their hands.

But you need to go deeper to make sure your pick is a solid one, as one CEF, the Clearbridge MLP and Midstream Fund (CEM), clearly demonstrates.

CEM holds shares of “midstream” master limited partnerships (MLPs)—or companies that operate pipelines and storage facilities for oil and gas. The fund sports a 12% discount to net asset value (NAV, or the value of the MLPs in its portfolio) today, as well as a 7.9% dividend.… Read more

Start rounding up your spare cash, because the best dividend buying opportunity—since last October—is coming soon.

Last week, we chatted about stacking dry powder for a special purchasing moment. For those of you who have been piling up the payouts into a cash mountain, let’s get ready to deploy it.

Why does this matter? Well, buying moments like these can secure us several years’ worth of returns at once. Let’s revisit the October example, which Contrarian Income Report subscribers will remember fondly.

At the time, we had two months of pullback behind us. Scary headlines had driven fear to levels that should be bought, and that is exactly what we contrarians did.… Read more

Stocks are floating higher daily—and I’m hearing from a lot of readers wondering when they should sell a winning income pick, and when they should let it run.

You’re probably sitting on some nice capital gains these days, too, and have been asking yourself the same question.

So today I’m going to give you the three-step indicator I use when making buy/sell decisions for my Hidden Yields dividend-growth advisory. It’s a simple “traffic light” setup, with green being buy, yellow telling us to watch a stock we own closely and finally red, when we sell and take profits.

Green: When the Dividend Outruns the Share Price, We Buy

If you’re a regular reader of my columns on Contrarian Outlook, what I’m about to say won’t surprise you: dividend growth is the No.… Read more

If you’re on the hunt for big dividends (and who isn’t these days?), closed-end funds (CEFs) must be on your shopping list. As I write this, there are more than 500 CEFs in existence, yielding an outsized 7.3%, on average.

Compare that to the yield on the typical S&P 500 stock: a measly 1.4%!

Ten-Year Treasuries? A still-pathetic 1.7%, even after their recent big jump.

But as dividend-rich as CEFs are, some do cut their payouts sometimes, just like any other dividend-paying investment. (Though the good news here is that, even after a cut, a CEF’s yield will almost certainly crush that of a typical stock, because CEFs’ payouts are so large to begin with.)… Read more

The market isn’t doing fixed-income investors any favors right now. But one of my favorite funds—in one of the best cash flow niches in the market—is delivering a gaudy 6.6% yield at today’s prices.

And it does that by holding some of Wall Street’s most boring, stable and dependable securities.

How can we bank this 6.6% “free lunch” when 10-year Treasuries still pay less than 2%? By tapping into an income stream that most individual investors rarely think about: Preferreds.

The Power of Preferreds

If we wanted to own a piece of a company, say JPMorgan Chase (JPM), we’d go out and buy a few shares of JPM.… Read more

One of the things we contrarian income seekers love about closed-end funds (CEFs) is that they often sell for less than what they’re worth.

CEFs’ discounts are especially appealing these days, as the market levitates into the stratosphere. Because when you buy stocks through a CEF trading at, say, a 10% discount to net asset value (NAV, or the value of the investments in its portfolio), you can get into great companies like Apple (AAPL), Microsoft (MSFT) or Visa (V) for 90 cents on the dollar.

This is a great trick—one you can’t find in ETFs or mutual funds. Plus, CEFs yield 7.3%, on average, today, so you get a monster payout in addition to your discount.… Read more

If you’re a regular reader, I owe you a big congratulations on the recent profits in your dividend portfolio.

Some of you are banking big yields. Others are riding dividend magnets to capital gains. A select group of savvy contrarians are profiting from payouts and price upside.

The result of your mini windfall, regardless of source, is cash. But this pile of money is not yet generating any income for us. So, what is the best way to employ these greenbacks? We have three options:

1. Reinvest the dividend money automatically via DRIPs,
2. Deploy the profits strategically via smart shopping lists, or
3. Stack the dry powder for a special moment.

Let me start with a special shout out to our dedicated readers at Barron’s. Here at Contrarian Outlook, we’ve been drawing up the playbook to retire on dividends for years (Two years ago, we literally wrote the book on the retirement strategy.)

So it was a hoot to see Barron’s run a cover story about retiring on dividends. But I have a bit of constructive criticism about the piece: the dividend stocks highlighted in the feature article had yields too low to actually retire on.

The magazine’s 10 buys included Coca-Cola (KO), International Business Machines (IBM) and Johnson & Johnson (JNJ) and had an average current yield of 4.1% between them (as of the time the piece was written).… Read more

This mess with Archegos Capital Management has shone a light on the use of leverage in investing. And it’s particularly relevant (in a good way!) to investors in high-yield closed-end funds (CEFs).

That’s because it:

1. Clearly shows the difference between gambling (what Archegos was doing) and investing in smartly run, value-focused high-yield funds (what we do), and …
2. Highlights a key misconception about leverage we can take advantage of. (We’ll look at a 5.5%-yielding fund that profits from a methodical use of leverage in a moment.)

Archegos, if you’re not familiar, is a hedge fund that had (until last week) $30 billion in positions in several stocks, including ViacomCBS (VIAC), Discovery Inc.… Read more

It is challenging to find stocks that pay enough money to retire on. For example, even a 3.3% dividend—generous by today’s standards—isn’t enough to turn a $1,000,000 into an income stream that will last forever.

I’ll save you the math. It’s just $33,000 per year on a million dollars.

Fortunately, this same dividend yield is understated on most mainstream financial websites. In reality, this stock paid 7.7% over the past twelve months. Which means its millionaire investors actually earned $77,000 in dividend income.

Yes, you read that right. There was an extra $44,000 hidden in plain sight thanks to a “special” dividend payment.… Read more