How to Buy the Best Dividend Stocks at a 16% Discount

Michael Foster, Investment Strategist
Updated: December 16, 2016

Few people know it, but you don’t have to buy a stock for the price you see on Yahoo Finance.

The truth is, you can buy some of the best large cap dividend payers for cheaper: and I don’t mean a little cheaper. I’m talking a 16% discount.

How?

Through a closed-end fund (CEF) that’s trading at a ridiculously high discount to its net asset value (NAV). That’s despite a strong track record, low expenses and an attractive 4.4% dividend yield.

Let’s break each of those things down one at a time, starting with the name of this unheralded investment.

It’s called Tri-Continental Corporation (TY), and it holds some of America’s safest and highest-quality stocks.…
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A Diversified 3-Click Portfolio That Pays 11.1%

Brett Owens, Chief Investment Strategist
Updated: December 15, 2016

Why is it so difficult to find good yield these days?

For the past half-decade or so, income ETFs and exchange-traded notes (ETNs) have exploded, to the point where ETFdb.com now lists some 130-plus dividend-focused equity products, 300-plus bond products and a host of other income plays on preferred stocks, alternative assets and more.

But ETFs that offer substantial yield? Well, that can get tricky. Less than a quarter of ETFs dedicated to dividend stocks yield more than 6%, and just a handful of bond funds do. In fact, of the roughly 2,000 ETFs that ETFdb.com tracks, just 75 yield more than 6% … and many of those are extremely risky leveraged products more suited to quick traders than investors who want to just sit back and collect a decent paycheck

Still, yield hunters have a few options to choose from.…
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A “Trump Windfall” Will Lift These Dividends 100%

Brett Owens, Chief Investment Strategist
Updated: December 14, 2016

The investment mantra “Don’t fight the Fed” may soon be replaced by a timelier one.

Don’t fight Trump Tower!

The S&P 500 has returned 4.3% in the month since the election. But certain sectors (such as banks and energy) have climbed even higher, faster. While others (such as REITs) initially languished.

Some of these moves are due to correct. But we also have a set of spectacular dividend growers selling for their cheapest prices this decade. Let’s sort through these Trump trades to find the remaining pockets of value for yield and price upside.

Banks: Below Book No Longer

As recently as spring, some of the best banks on the planet were selling for less than their book value.…
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A “No-Brainer” Buy for a 6.9% Yield and Double-Digit Upside

Michael Foster, Investment Strategist
Updated: December 13, 2016

It’s as close to a sure thing as you can get: interest rates are headed higher.

The futures market tells the tale. Right now, it pegs the odds of a hike at the Federal Reserve’s December 14 meeting at near 100%:

Everyone Agrees: Rates to Rise

An-Ignored-Investment-With-a-6-9-Yield

What’s more, futures markets expect interest rates to go up again in 2017. So if you invest in bonds in a market like this, you need to consider how you can protect yourself from higher rates.

I’ll show you a one-buy option that will do just that—and hand you a nice 6.9% yield in the process—in just a moment.…
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The 5 Best Dividend Stocks to Buy for 2017 – and 9 to Avoid

Brett Owens, Chief Investment Strategist
Updated: December 12, 2016

With the election in the rear-view—and Inauguration Day just a few weeks off—plenty of investors have asked me what they should do with their portfolios now.

I’ll name five bargain dividend growers that should be on your buy list in a moment. But first, here are 2 sectors—and 9 stocks—you need to handle with care.

Let These 4 Growth Rockets Cool Down

On October 3, I pounded the table on defense stocks, namely Raytheon (RTN) and Northrop Grumman (NOC), and infrastructure plays Cummins (CMI) and Parker Hannifin (PH).

I hope you followed that advice, because all four have beaten the SPDR S&P 500 ETF (SPY) since then.…
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These 6%+ Dividends Will Thrive As Interest Rates Rise

Michael Foster, Investment Strategist
Updated: December 9, 2016

You can take it to the bank: interest rates are going up.

Everyone from Janet Yellen to Donald Trump says it needs to happen. Traders betting through the Fed futures markets agree, pegging the odds of a quarter-point rate hike at the Fed’s December 14 meeting at 94.9%:

These-Dividends-Will-Thrive-As-Interest-Rates-Rise

More hikes seem likely next year, if oil prices keep rising, taking inflation along with them.

Since higher rates are bad for high-yield assets, does this mean it’s time to give up and accept that 2% dividends are the only income you can expect in this market?

No way.

Because there’s an easy way we can protect ourselves from higher rates and still collect a nice 6.8% dividend yield.…
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3 “Preferred” Dividends for Secure 6% Yields

Brett Owens, Chief Investment Strategist
Updated: December 8, 2016

If you could earn 5% to 6% in income every year from a stock you don’t have to watch … you’d hold it today, right?

Well, if you don’t already, here’s your wake-up call.

Preferred stocks are a rarely talked about type of corporate equity that packs a one-two punch of high yield and low volatility. But that’s not why they’re called “preferred” – that moniker comes from the fact that preferred dividends take priority over common shares’ dividends, and must be paid out first. If a company wants to cut or suspend its payouts, it must do so to common shares before preferred shares.…
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4 Tax-Free 10%+ Yields With 38% Upside

Brett Owens, Chief Investment Strategist
Updated: December 7, 2016

The last time this happened, municipal bonds soared 40% over the next 12 months.

These usually-steady payers are coming off their worst month since September 2008, according to Standard & Poor’s, when its “muni” index dropped 4.8% (and popular funds fared even worse):

The Last Muni Bloodbath in Sept 2008…

4-Tax-Free-10-Yields-With-Upside

October 1, 2008 didn’t mark the bottom for munis. But it turned out to be a pretty good time to buy, with these funds returning up to 38.4% in the ensuing 12 months!

… Gave Way to This 12-Month Muni Boom

Muni-2008-Bounce

Those were scary times. The financial world was melting down, and prominent pundits feared that municipalities would be the next wave of defaults.…
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Buy These 2 Cheap Dividend Payers Before Yellen Raises Rates

Michael Foster, Investment Strategist
Updated: December 6, 2016

On the lookout for safe dividends? (Who isn’t, right?)

These days, you generally have three options: large-cap stocks with long dividend histories, municipal bonds and US Treasuries.

Treasuries are considered the safest of that group, and large-cap stocks the riskiest, but they’re still much safer than plenty of other investments, such as small caps and junk bonds.

I’ll show you two low-risk investments that are great buys now in a moment. But first, I want to tell you why recent events have called the safety of some of the options I just named into question.

Let’s start by looking at the following chart:

“Safe” Assets Turn Volatile

Buy-These-2-Cheap-Dividend-Payers-Before-Yellen-Raises-Rates

First, note how the iShares S&P National AMT-Free Municipal Bond Fund (MUB), a good proxy for municipal bonds as a whole, is the least volatile of the three funds shown above.…
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Forget the December Rate Hike: Buy These 4 Dividend Growers Now

Brett Owens, Chief Investment Strategist
Updated: December 5, 2016

Still think the Federal Reserve may not hike rates this month?

It’s time to change that view.

Traders betting through the Fed futures market now see the odds of rates staying where they are at a measly 1.4% after strong employment and consumer confidence numbers last week.

Buy-These-4-Dividend-Growers-Now

And if you’ve tried to take out a mortgage lately, I don’t have to tell you which way interest rates are headed: no thanks to a spike in 10-year Treasury yields, which hit a 17-month high last week, you’re now paying more than 4.0% on a 30-year mortgage.

Borrowers Get Mauled

Mortgage-Rates-Spike

So, time to hold off on dividend stocks, then, right?…
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