Is the Bond Gravy Train Derailed? What to Buy (and Sell) Right Now

Brett Owens, Chief Investment Strategist
Updated: November 13, 2019

Interest rates are the talk of the bond world right now. They are going up for once!

Does this mean we should book profits on our fixed-rate bond positions? They have benefited greatly from sliding interest rates throughout 2019 (and that’s an understatement).

Most income investors are thrilled to see 4% or 5% returns from their bond funds. What they wouldn’t give for the eight-pack of “bond moonshots” we contrarians have enjoyed for 25% average returns!

How We Made 25% in 11 Months with Safe Bonds

Yet I’m sitting here at the Inside Fixed Income conference (the bores I endure for you, dear subscriber) in San Diego, California (well… never mind) hearing about the $74 billion now held in bond ETFs.… Read more

Jay Powell’s Favorite 2020 Dividend Play? Probably These REITs (Paying Up to 6.5%)

Brett Owens, Chief Investment Strategist
Updated: November 12, 2019

Real estate investment trusts (REITs) have momentum now. And don’t let their terrific 2019 scare you—next year is setting up to be even better thanks to Jay Powell’s gang of doves!

I’ll reveal three strong REITs for 2020 at the end of this article. Together they give you growing dividends that double (and even triple) the market’s payout. And to be honest, one isn’t exactly a REIT—it’s a REIT-owning closed-end fund (CEF) that drops a huge 6.5% dividend into your account every month.

REITs: The Ultimate Rate-Proof Play

First, no matter what Jay Powell says, you can take this to the bank: more rate cuts are on the table as the on-again, off-again trade war lingers and the president batters the poor fellow tweet by tweet.… Read more

$50,000 in Dividend Income, 0% in Tax. Here’s How.

Michael Foster, Investment Strategist
Updated: November 11, 2019

I’m going to show you my favorite (perfectly legal) way to pay 0% tax on your dividend income.

To show you the big savings this could mean, let’s look at two fictional investors who are nearing retirement: Jane and Janet.

We’ll assume both are single, are earning $50,000 per year and live in a state with no income taxes. Now let’s assume Janet has taken the so-called “right” path, as suggested by her financial advisor, while Jane has steered her own course. A quick look at both will show how that “right” path can create a hefty tax problem.

Let’s say Janet put a million dollars in the Vanguard S&P 500 ETF (VOO) because she’s been told that a low-cost index fund is best for retirement.… Read more

Rates to Zero, REITs to the Sky? 3 Cheap Landlords Paying 5% to 6%

Brett Owens, Chief Investment Strategist
Updated: November 8, 2019

Are interest rates heading to zero in the US? Or, dare I say, negative range?

I don’t think so. But if they do, real estate investment trusts (REITs) are going to absolutely skyrocket. This year-to-date has been a sneak preview. Most REITs have seen their valuations expand with the market rally, but we haven’t missed out on all of them.

In a minute, we’ll discuss a trio of dirt-cheap REITs with attractive yields between 5% and 6%. But first, let me show you just how overstretched this market has become.

First, let’s look at the “Shiller PE.” This is the “second-level” price-to-earnings ratio, created by legendary economist Robert Shiller, that factors in average inflation-adjusted earnings over the past decade.… Read more

Must Read: How I’ll Invest for Safe 6.9% Dividends in 2020

Michael Foster, Investment Strategist
Updated: November 7, 2019

There’s a quiet shift happening in the market—and today I’m going to show you how to tap it for further gains. (And I’ll reveal a closed-end fund paying a safe 6.9% dividend, too).

What’s more, this simple move will help insulate your nest egg from a flare-up in the trade war (still very much on the table despite chatter about a “Phase One” deal with China) and other overseas dangers that could take investors by surprise—especially those who simply buy an S&P 500 index fund and hope for gains.

It starts with a pattern that’s emerged in the latest earnings numbers.… Read more

10 Yields Up to 15.4%: Can You Spot the Safe One?

Brett Owens, Chief Investment Strategist
Updated: November 6, 2019

Most stocks that pay more than 10% are, honestly, trash. Their yields usually look big because their stocks have split once or twice “the wrong way.”

Take Tupperware Brands (TUP), for example. The party ended abruptly for these shareholders. I feel bad for anyone who was mistakenly holding these shares “just for the dividend.”

The yield has skyrocketed from the 3% to 4% range into double-digits. Which would normally be pretty sweet, except the reason for the 10%+ payout is a collapse in the stock price from $72 to $9-something:

The Tupperware Party Ends in Tears

“First-level” income investors tend to turn their brains off once they have identified the yield.… Read more

3 Overpriced REITs Headed for a Fall

Brett Owens, Chief Investment Strategist
Updated: November 5, 2019

Real estate investment trusts (REITs) are on fire—and we need to be very careful not to get burned.

Yellow Light on Some (but not all) REITs

Look above and you’ll see what I mean—the Vanguard Real Estate ETF (VNQ), in blue, has topped the S&P 500 on price returns alone. That’s a monster run for income investments like REITs.

More REIT Gains to Come—But Be Cautious

Here’s the twist: there’s plenty more upside ahead—and you can thank the Fed for that. Its latest rate cuts will keep powering REITs higher, for two reasons:

  1. Lower rates cut REITs’ borrowing costs, and these trusts (owners of everything from senior-care centers to cell towers) need lots of borrowed cash to buy new buildings and upgrade current ones.
Read more

2 So-Called “Safe” Dividends Circling the Drain (sell now!)

Michael Foster, Investment Strategist
Updated: November 4, 2019

It’s been a terrific year for one specific group of funds—and that means, if you’re one of many people who own them, you need to be very careful.

I’m talking about senior-loan (also known as floating-rate) funds, which have made big gains in 2019. That’s lulled many folks into a false sense of security, idly thinking these steady returns will roll in for the long term.

That’s a big mistake.

To see what I mean, look at the Invesco Senior Loan ETF (BKLN), which serves as something of an index for senior loans. It yields 5.2% and is up 7.3% in 2019.… Read more

Is This $4,424 Monthly Dividend Paycheck For Real?

Brett Owens, Chief Investment Strategist
Updated: November 1, 2019

I recently illustrated the dangers of trusting the Dividend Aristocrats to take care of your retirement needs. Their average yield of 2.4% is a fraction of what you’ll need to retire on dividend income alone, and their payout growth—while long-standing—isn’t rapid enough to get you where you need to be when it’s time to call it a career.

Now here’s another problem with even the highest-yielding Dividend Aristocrats. Stick with me as we solve it and tap into $4,424 in dividend cash each and every month.

Here’s a look at the income schedule for an investor who sinks $100,000 evenly into the five highest-yielding Dividend Aristocrats.… Read more

Forget Index Funds: Buy This for 316% Gains, 7% Dividends

Michael Foster, Investment Strategist
Updated: October 31, 2019

It’s a line you’ve no doubt heard before. It goes like this: “The market is too efficient to beat, so you may as well just park your cash in a low-cost index fund and call it a day.”

Nonsense! The truly ridiculous thing is, this myth is proven wrong every day—but investors just can’t quit it. And it’s costing them triple-digit returns (and 7%+ dividends) that could leave them well short of what they need to retire.

For proof that this market is far from efficient, just look at the one-day 22% drop in shares of Beyond Meat (BYND). That came after the company beat revenue expectations and its profits were twice what the market expected.… Read more