There’s been a massive discount building in a pocket of the market where you can get big dividends that are entirely tax-free.

And I’m going to show you three “1-click” ways to tap this income investor’s wonderland today.

I know that tax-free anything these days sounds impossible, but in this case, I assure you it’s not. The key is investing in municipal bonds, which give you a passive income stream that is entirely tax exempt at the federal level. Plus it’s also exempt from state taxes in many situations, too.

That means a 4%-yielding municipal bond, or “muni,” is more like a 5.3%-yielding dividend stock for a family earning $100,000 per year—and that’s before we factor in state taxes.… Read more

The average yield among the 25 largest dividend exchange-traded funds is a meager 2.7% right now. That means if you plunked a $1 million on ETFs dedicated to dividend stocks, you’d only make $27,000 every year.

That’s barely higher than the 2018 federal poverty level for a family of four ($25,100)!

But you and I can do better – by double, even triple! I’m talking about turning these lame 2.7% payouts into fat dividends of 7.2% or more.

Serious yield hunters gravitate toward closed-end funds, where it’s common to find distributions of 7.2% or even higher! A retirement income of $72,000, after all, is a lot cushier than scraping by on $27,000 annually.… Read more

When it comes to dividends, any stock yielding more than 10% these days needs to be taken with a grain of salt. That’s because bigger isn’t usually better when you’re talking about dividend yields.

The FOMC has targeted short-term rates of between 1.75% to 2.00% in the U.S. and the yield on the benchmark 10-year note is hovering around 3%. Almost any other income investment can be priced based off these rates, depending on how much extra risk you’re willing to take on.

Historically-speaking, any time a stock is paying more than seven percentage points above the AAA-rated, government-secured debt, investors begin to worry if the dividend could be cut.… Read more

What a year it’s been for oil!

Oil Takes Off

With a 43.5% climb in just a year, oil prices have blown by several technical levels to breach $70, and $80 is on the table by the end of the year.

This is the highest price since 2014, and it’s a very good sign for stocks—which is why you should consider buying 2 funds paying massive dividends and boasting top-notch energy-sector exposure.

(And if you prefer to invest in oil through individual stocks, rather than funds, check out this recent article by my colleague David Peltier.)

Before I show you my 2 energy funds, though, let’s talk a bit about what isn’t happening with oil.… Read more

If you’re looking for tax-free yields, municipal (“muni”) bonds can provide you with 5%+ distributions that Uncle Sam won’t touch. With rates rising, it is a bit tricky to make savvy buying decisions at the moment. But income investors buying smartly today are banking 5%+ yields – and paying as little as 88 cents on the dollar!

For quick profits, it’s best to buy munis after mini-panics. They seem to happen every year or two, presenting us levelheaded contrarians with safe yields for cheap. (Most recently, readers who followed my advice and bought munis after an irrational “tax plan panic” enjoyed total returns up to 16.7% in just 12 months!)… Read more

Once again, almost everyone has gotten sucked in by a tired investor slogan that’s dead wrong—and it’s costing them big gains (and income).

But that’s good news for contrarians like us, because we can bank some easy profits thanks to this all-too-predictable reflex.

That’s especially true now that the Federal Reserve has sent out a blaringly obvious signal that it’s stuck to its rate-hike track, calling the economy “strong” after its latest meeting last week.

But let’s not get ahead of ourselves. Before I go further, the shopworn myth I’m talking about is that REITs nosedive when interest rates rise.

Many folks just can’t be talked out of it, despite all evidence to the contrary, including the fact that REITs skyrocketed during the last sustained rising-rate cycle, in 2004–06.… Read more

If you’ve read the headlines about tech’s woeful slump in the past couple weeks, you might think stocks are out of favor.

You’d be wrong—and this chart proves it:

Forget the Headlines: Stocks Are Rolling

After February’s gut-wrenching plunge, the S&P 500 has more than recovered and is up 6.2% year to date. If this trend continues, we’re looking at a 12.4% return on the year.

But look at the orange line above—that’s the tech-benchmark Invesco QQQ Trust (QQQ), which is up 13.2% year to date, even after this latest correction in tech. That adds up to a monstrous 26.4% return for 2018 if that trend continues.… Read more

What do most exchange-traded funds (ETFs) and many blue-chip stocks have in common?

They’re big, they’re popular with Wall Street pundits … and they don’t deliver nearly as much income as investors need to retire.

Not even close.

I want to share some ugly and eye-opening numbers with you about the skinflint ETF industry. I recently dug into the 100 most popular funds by assets under management, and here’s what I found:

• Just one of those 100 funds yields more than 7.7% – my threshold for a truly retirement-sustaining holding.
• Only about a dozen of those funds yield more than 3%.

One popular investing myth is that the market always efficiently prices stocks. The truth is that active traders have a herd mentality, and often push prices to extreme levels in the short term.

That’s when it truly pays to be a contrarian, to be able to buy when prices are down and dividend yields are up.

I believe this is currently the case with energy master limited partnerships (MLPs). Crude oil fell 7% in July, which was its worst monthly performance in two years. Natural gas also declined more than 4%.

However, the two names I’ve found are pipeline and transport firms that have largely fee-based businesses and are not affected by a temporary drop in energy prices.… Read more

120 billion dollars.

That’s how much market cap Facebook (FB) dumped over the side in a single day when the company crushed Wall Street’s hopes with a soft second-quarter earnings report last week.

This was the biggest single-day loss in US stock-market history—and the stock has plunged more since, to a loss of over 20%.

“Facebook Fright” Spreads Like Wildfire

The panic has spread to FAANG land, with Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Alphabet (GOOG) all showing losses right after Facebook’s report, even though many of these companies have very different business models than Facebook. And the one that’s closest, Alphabet, recently reported a blowout quarter.… Read more