It’s one of the first questions readers usually ask me:

“Don’t closed-end funds’ high dividend yields make them dangerous?”

It’s a good question, with CEFs offering yields of 8% or more. It’s also a general (but far from certain, as I’ll explain shortly) rule that higher yields bring a higher risk of a dividend cut.

Take Frontier Communications (FTR), a stock my colleague Brett Owens sounded the alarm on in April.

The telecom provider was yielding a whopping 16% before it slashed its dividend in June 2017. The stock plunged when the cut was announced:

Slashed Dividend, Slashed Share Price

FTR is yielding a whopping 20% now, thanks to its collapse in price (because you calculate yield by dividing the annual dividend rate into the current share price).… Read more

The term closed-end fund (CEF) is a bit of a double entendre. An unintended one, I’m sure – and one we can leverage for safe 6%, 7% and even 8% yields with upside to boot.

The “closed” in CEF technically means that the fund’s number of shares are fixed. Which is why these vehicles can have wild price swings above and below the values of their actual assets. (Good for us contrarian income seekers – we can buy below fair value to maximize our yields and upside.)

They are also closed in their actual communications with the financial world. Fund information is often limited (sometimes to one-page fact sheets) and it’s difficult to get management to talk to you.… Read more

You’ve probably heard the “wisdom” on mutual funds a million times.

It goes like this: mutual funds collect high fees and most still fail to beat the market, so why bother when you can buy a low-cost index fund, like the SPDR S&P 500 ETF (SPY) or the Vanguard 500 ETF (VOO), and tag along with the market’s performance?

To be fair, it hasn’t been a bad strategy. Look at the total return those funds have posted over the last five years:

Indexing Has Paid Off—But We Can Do Better

Nearly doubling your money in half a decade is nice—but does that really mean mutual funds are ready for the dustbin of history?… Read more

Today I’m going to expose a major mistake way too many folks make. Then I’m going to reveal 3 totally ignored stocks whose dividends are soaring. They yield up to 5.8% now and are poised for 50%+ gains in short order!

More on those in a moment. First, we need to talk about that classic wealth-killing blunder.

Funny thing is, it’s one of those moves that seems like the safe thing to do, but if you fall into this trap, you’ll leave a fortune in gains—and income—on the table!

I’m talking about limiting your portfolio to the household names of the S&P 500.… Read more

Dividend and growth fanatics have argued tooth-and-nail about who backs the superior strategy for decades. But time and time again, deep research shows that investors like you and I that prefer collecting quarterly checks come out on top.

The formula is simple: Plow your money into healthy-yielding dividend stocks – like the three no-brainer buy-and-hold equities I have on tap for you today – and let the outperformance roll in.

However, time and time again I stress the importance of substantial dividend yield. Low, begrudging payouts simply won’t do.

A study published by C. Mitchell Conover, CFA, CIPM, Gerald R. Jensen, CFA, and Marc W.… Read more

Preferred stocks often pay high-single-digit yields, with far less risk than their similar-yielding “common” stock cousins. While many 5% and 6% common payers are yield traps with broken business models, it is possible to find preferred payouts at these levels that are perfectly secure.

Not yet familiar with preferred stocks? With “common” shares paying so little, it’s time to get acquainted.

Most dividend darlings don’t pay much on their own common shares today. You’ll be hard-pressed to find a dividend aristocrat with a yield above 3% or a P/E ratio below 20.

On the other hand, a company will issue preferred shares to raise capital.… Read more

I hear it from readers all the time: closed-end fund fees are just too high!

And when you can get a passive fund that simply tracks the S&P 500, like the Vanguard 500 ETF (VOO), for a microscopic 0.05% expense ratio, it can seem silly to pay over 2% for a closed-end fund.

(If you’re unfamiliar with CEFs, click here to learn more about them—and why you need to hold at least a few of these high-yield investments in your retirement portfolio.)

My answer is that you need to look closely at total returns, keeping in mind that CEFs report returns after fees.… Read more

When the “Bond God” Jeffrey Gundlach speaks, we income seekers listen. And recently,  the preeminent yield guru on the planet shared his favorite stock idea with a private audience.

I’ll share the specifics on his recommendation in a moment, including the exact “pair trade” that Gundlach likes. But first, let’s recap why we care what he says.

His Profitable Contrarian Calls

When Gundlach speaks, he often takes heat from his peers and the media because his calls run contrary to popular belief. But he’s usually right – and profitable:

• In 2007, he warned investors to get out of subprime mortgages just before the credit markets melted down.

The financial media is churning out doom-and-gloom stories 24/7—and that’s keeping many folks on the sidelines when they should be buying.

Sure, you could say that about almost any period in history, but it’s especially true in 2017, when stocks have done this:

A Steady Ride Up

Consider this chart for a moment. This gain came during the Russia scandal, the North Korea nuclear threat and environmental and humanitarian disasters caused by Hurricanes Harvey and Irma.

Can you see any of those events in the chart above?

I can’t.

In reality, stocks aren’t political and they’re not emotional. The truth is, they only go up and down if a major news story also has a major financial impact.… Read more

Let’s face it: brands are dead—and that’s terrible news for the 4 household names (and their landlords) we need to talk about today.

Research from Scott Galloway, founder of digital-research firm L2, tells the tale.

Galloway looked at the 13 S&P 500 stocks that have beaten the market for five straight years and found something shocking: just one, Under Armour (UA), is a consumer brand.

And as Galloway points out, there’s no way UA will keep that run going.

UA: The Last Brand Standing—for Now

The other 12 names on the list are mostly innovators that have sliced into old-school businesses and flipped them on their heads—think Facebook (FB), Salesforce.com… Read more