We’ve got a once-in-5-year buy window open to us in one of the highest-yielding investments out there.

And (for once) we can thank the Fed for these cheap 8%+ payouts!

I’m talking about closed-end funds (CEFs), a corner of the market where rich 8%+ yields (and monthly payouts) are the norm.

These (too) often-ignored funds are set to spike because the last time Powell & Co. acted like they are now, CEFs’ prices soared—and they handed their lucky investors big price gains to go along with their huge dividends.

If 2023 Is 2019 Redux, CEFs Will Explode Higher

To see what I’m getting at here, think back to late 2018.… Read more

With the recent pullback from the market’s high this year, we’ve got a nice second chance to buy some terrific dividend stocks cheap. But don’t waste your time with lame payers like General Mills (GIS), with its 2.5% yield. Or the miserly 2.1% you get from a so-called “Dividend Aristocrat” like McDonald’s (MCD).

Even though inflation is trending downward, it’s still at 5%. That’s well ahead of these pathetic blue-chip yields—and with the economy still performing well, it could be a while yet before it slows meaningfully from here.

Bottom line: We just can’t afford to own low payers like these any longer.… Read more

Select bank stocks may be cheap, but why settle for 2% to 3% yields?

Let’s really bang on the bargain bin and for dividends between 8.3% and 9.4%. These yields are available thanks to the current banking fears.

Fortunately, these payouts are more secure than vanilla investors appreciate. Hence, the dividend deal.

A Better Way to Play Banks

I wrote a few weeks ago about how mainstream investors are trying to time a bottom in banks.

Fair enough. Banks are extremely cheap right now by a well-known measure of long-term value: CAPE (cyclically adjusted price-to-earnings), which is the price divided not by the past year of earnings, but the past 10 years.… Read more

If you’ve missed out on this market’s roughly 6% gain this year, don’t worry. There’s an easy way to grab that same 6%—and more–and do so in safe dividend cash.

The key, of course, is closed-end funds (CEFs), our favorite high-yield vehicles, specifically the 8%+ payouts these funds offer.

Before we get to a couple of high-yielding CEF tickers (yielding 8.8% and 10.2%), let’s dive into the market’s gain and go sector by sector, because it tells a clear story of how some investors have seen that 6% rise and some have seen even more (or less!).

First up, if you’re not holding a significant amount of tech, you’re likely already behind, as the sector, a laggard last year, is up 16% so far in 2023.… Read more

We’re heading towards the most telegraphed recession of all time. At least in recent memory.

So should we sell everything? Not exactly. Granted, recessions are usually bad for stocks. Vanilla investors who own nothing-but-ETFs are in a tough spot.

But since you’re reading this, I assume:

1. You pick stocks better than a robotic ETF.
2. You’re not scared of a stinkin’ recession. You’re here looking for high-yield exceptions to the “sell everything” rule.

I appreciate that about you, my fellow contrarian. If I thought rules applied to me, I would have made it past age 26 in Corporate America! This is why we get along so well.… Read more

I’m not going to lie to you: this market is headed for a fall. And if you’re caught holding the wrong dividend payers, you could be in for some serious losses indeed.

How serious? Well, the worst of the four stocks we’re going to delve into below—Cracker Barrel Old Country Store (CBRL)—plunged 26% last year, much further than the S&P 500. If you hold this one, or the other dangerous dividend we’ll discuss below, it’s time to cut your losses and get out now.

Cracker Barrel Plunged in ’22—a Sign of Things to Come?

But we’re not only going to sell today—we’re going on offense, too.… Read more

We’ve got a sweet opportunity to grab a 14% dividend sitting in front of us, and we can thank the ongoing sale on bonds for this deal.

This double-digit payer—which has held that huge payout steady for years—holds junk bonds, or corporate debt that falls below the investment-grade line.

Isn’t there more risk here? Sure. But we’re well-compensated by the big yields junk bonds pay. Heck, even the yield on the benchmark SPDR Bloomberg High Yield Bond ETF (JNK) is a healthy 5.8% now.

But JNK really is for novice investors. When we go with CEFs like the one we’ll delve into in a moment, we can boost our payout by more than double, to 14%—and get paid monthly.… Read more

Private equity (PE) is a rich guy and gal favorite. PE firms find deals and deliver outsized dividends.

They don’t like dealing with common folk. So, PE shops typically set a minimum of a few hundred thousand dollars or so to invest.

But we contrarians have a better way! By tapping BDCs—or business development companies—we can toss as little as $20 into a PE payer.

Better yet, we can secure yields between 8.5% and 13.1%. We’ll discuss three examples today. Including one that is trading below book value!

If you’ve never heard of business development companies (BDCs), you’re not alone. There are only a few dozen publicly traded BDCs, and even the largest one would be a minnow in the S&P 500.… Read more

With the first quarter behind us, now is a good time to ask ourselves if stocks—and especially 8%+ yielding closed-end funds (CEFs)—are getting just a little ahead of themselves.

Let’s start with stocks, then we’ll get granular, looking at how CEFs (which usually lag stocks by a few weeks) are setting up as we move deeper into Q2.

Source: CNN

One glance at the CNN Fear and Greed index and you could be forgiven for thinking things are getting a bit too hot out there. This indicator— a useful indicator of investor sentiment—was pegged at extreme fear for most of 2022, so the reversal was inevitable.… Read more

Worried about a recession? Two thoughts:

1. I don’t blame you.
2. Consider this recession-resistant REIT (real estate investment trust), poised to rally on an economic slump.

Why rally? Well, interest rates and REITs tend to seesaw. When rates rise, REITs fall. At least that’s the conventional wisdom.

In recessions, interest rates fall. Normally bullish for REITs—consider them a  “second-level” bet on a bond bounce.

REITs, after all, are the bond proxies of the stock world. Investors buy them for their yields. That’s why we like them here at Contrarian Outlook.

It’s part of the REIT special sauce. As long as they dish most of their profits (90%+) as dividends, they pay no corporate taxes.… Read more