It was fun while it lasted.

I’m talking about the brief buying opportunity last winter, when the S&P 500 plunged 10% in the first six weeks of 2016.

On February 10, the day before the market hit its midwinter trough, I bet that it was ready for a turnaround, as the number of bearish option bets had hit a 10-year high—a clear contrarian indicator.

I then gave you the names of three stocks to buy straightaway. As if on cue, all three went on to clobber the index’s subsequent 13.3% rise: Ventas Inc. (VTR) exploded for a 33% gain, while HCP Inc.… Read more

Business development corporations (BDCs) are a great addition to a high-yield portfolio. With yields over 8%, and sometimes even over 10%, these companies provide a strong income stream right now, and can bolster the overall yield of your portfolio.

But BDCs can be dangerous. Because they are legally required to return 90% of their income to shareholders, and because they regularly issue a lot of new shares to expand operations, capital gains are rare in these asset classes and dividend cuts are common. BDC investors need to carefully track how companies’ net investment income (NII) is trending, because they use NII to fund payouts.… Read more

I really hope you didn’t follow the flawed “sell in May and go away” strategy I warned you about last month. Because if you dumped all your stocks on, say, May 1, you’ve already missed out on a 1.5% rise in the S&P 500.

That may not sound like a lot, but that period saw some nice gains from recommendations I gave you earlier this spring, like Apple (AAPL), one of my top picks for a retirement portfolio, which jumped 6.5%; Allied World Assurance (AWH), up 4.2%; and senior care provider Ventas, Inc. (VTR), up 6.8%.… Read more

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. You do need to make sure you avoid five common mistakes when doing so – which I’ll explain in a moment.

But first, let’s explore the stock-for-CEF trade. For example, American International Group’s (AIG) investors can potentially trade in their 2.2% dividend yields for the Gabelli Dividend & Income Trust Fund’s (GDV) 7% payout. AIG is GDV’s largest holding amongst a list of blue chip dividend payers plus growers like Wells Fargo (WFC) and Verizon (VZ).… Read more

The dog days of summer are here, and you may be tempted to put your portfolio on autopilot and check out for the next three months. That would be a big mistake, though, because you could miss out on some of the year’s biggest dividend hikes.

Case in point: the four companies below, all of which are getting set to juice their payouts this summer—but I only see three as buys right now.

Medtronic: A Dividend-Growth Machine

Investors in Medtronic (MDT) could be looking at an 18% dividend boost in June, or at least that’s what Barron’s recently predicted. It’s a sensible call after the company gave its shareholders Christmas in June last year, with a 25% raise.… Read more

Did you know there’s a reliable way to significantly boost the income you’re collecting from the dividend stocks you already own?

I’m talking about ways you can turn 3% yielders into 8% income generators. And it doesn’t involve leverage or any other risky techniques.

I’m talking about “covered calls” – one of the secrets of turning pedestrian blue chip dividends into cash cows. If you’re not familiar with the practice, read this article on Stock Options Channel about selling calls for income; it covers the basics and is pretty easy to understand. In short, call options are a kind of insurance on stocks, and you can sell this insurance for cash without putting additional capital at risk, beyond what you’ve already invested in the stock.… Read more

Stop me if you’ve heard this lie before…

“Higher rates are going to hurt high yield stocks.”

It’s a lazy blanket statement that, for the most part, just isn’t true. And that presents great opportunity for us income investors with a contrarian mindset. We can look past the first-level headlines to the second-level facts – and build a portfolio that will actually outperform after summer’s rate hike.

About that hike – it’s not a foregone conclusion, but the “smart money”, or traders who actually place money on the various likelihoods, believe there’s a 53% chance of a boost by late July:

Fed Fund Futures Implied Probabilities for July 2016

That’s a big shift from a month earlier, when traders were only pricing in an 11% chance of a hike by then.… Read more

I’m sure I don’t have to tell you how tough it is to build a dividend retirement portfolio that provides a decent yield these days.

Many investors make utility stocks a cornerstone, but that strategy is less appealing this year, with many utilities’ valuations stretched and their yields well below long-term averages.

Take Duke Energy (DUK), America’s biggest utility by market value, whose trailing-twelve-month P/E ratio has climbed to 20.1 from 17.8 at the start of the year. Meantime, its yield has slumped to 4.1% from 4.5%.

Duke Gets Pricey

The New Cornerstone of Your Dividend Retirement Portfolio

But fear not, there’s another group of investments boasting even higher yields than utilities; I’m talking payouts of 6% and up.… Read more

In a world of record low interest rates, where savings accounts offer less than 1% interest, investors are struggling to find a risk-free return on their money that will outpace inflation. With U.S. Treasuries no help, many people are flocking to dividend growth stocks or junk bonds.

Unfortunately, both of these can be volatile, as we’ve seen over the past year. Which is why it’s surprising so few have jumped into a better alternative: municipal bonds.

Benefits of Municipal Bonds

Munis have several advantages, and a big one is their tax-free status. Many (but not all) municipal bonds are tax free, meaning that the yield they return is actually higher than they first appear.… Read more

Today I’m going to share my favorite retirement investment with you. Even with the stock market at elevated levels, I expect it to earn me 8-10% annually over the long haul.

Last month my software company setup a 401K retirement plan through Vanguard. I had to select my funds – and that gave me instant pause. Sure, stocks for the long run… but the S&P at 23-times earnings? Europe or Asia? Roll the dice on emerging markets?

My answer was “none of the above.” Instead I piled my current and future contributions into the Vanguard Dividend Growth Fund (VDIGX) with a 100% allocation.… Read more