2024 is setting up to be a great year for us contrarian dividend investors—but to take full advantage, we need to buy now—while fear is still in the air.

Because that terror is totally unjustified. 

Here’s how I see the current state of play: Fed rate hikes are toast, and a Santa Claus Rally is on tap. In fact, the more Jay Powell tries to persuade us he’s going to keep bringing the hurt (as he did again last week), the hollower it rings.

Look, inflation is on the wane, and the last thing Jay wants is a repeat of the March banking mess.… Read more

Not many people realize it, but there’s a way you can actually get paid to own stocks.

I’m not talking pennies, either. The fund I’m about to show you is capable of generating $64,000 in dividends per year on a $500,000 investment, thanks to its 12.8% yield, as of this writing.

This gives us three things:

1. A large, reliable income stream with a lower risk of principal loss (unlike many annuity products and other income funds out there, where loss of principal is guaranteed).
2. Diversification across over a hundred companies in one of the most oversold sectors today: technology—including firms driving the AI revolution, like Nvidia (NVDA).

Small dividend stocks are dirt cheap right now. I’m talking about stocks trading for less than one year’s worth of sales. Yields up to 14.7%. And single-digit P/E ratios.

Why such deals? Well, because they’ve been pummeled into bargain territory of late. A number of high-yield bargains are staring us right in the face.

Small firms, straight up, are the cheapest stocks on the planet right now:

Value is great but show us the money! We’ll do so with five small-caps averaging a stellar 12% in yield among them. Are these deals or are these equities cheap for a reason?… Read more

Imagine a fund yielding 16.2% that’s likely to keep that high payout steady for years and years. I know it sounds unthinkable, yet we have just such a fund sitting in front of us today—ripe for buying at a discount, no less.

That would be the PIMCO Dynamic Income Fund (PDI), a bond fund throwing off that 16.2% payout, as of this writing. PDI uses a variety of credit investments to produce that outsized income stream. Thanks to high interest rates that look set to stay high for some time, and thanks to a sudden drop in the fund’s valuation, that income stream is sustainable.… Read more

Closed-end funds (CEFs) are ready to climb after a two-month decline. In preparation for this pop, select vanilla investors are buying this 11.1% dividend with its 14% downside.

Wait, what?!

Everyone hates bonds today. Yet, somehow, these bonds are selling for $1.14 on the dollar.

I sure wouldn’t do it. I’d favor the fixed income that everyone hates. (More on these discounted dividends in a moment.)

Who is this “I’ll pay a premium” belle of the basic income ball? Convertible bonds. Convertibles pay regular interest. In this way, they act like bonds. You buy them and “lock in” regular coupon payments.… Read more

Look, this deglobalization trend is hitting high gear—and if you miss your chance to tap it for surging dividend payouts, you will regret it down the road.

After all, it’s megatrends like this one that we contrarian income-seekers live for. Let the “basic” investors sweat headline-driven fears like rising rates and recessions. We’ll happily lock in our “megatrend” dividends and ride along for years, and even decades, as our payouts soar triple-digits!

Really, terms like “deglobalization,” “onshoring” and “friendshoring” are just fancy ways of talking about the flow of manufacturing jobs back to the US, or to US neighbors like Canada and Mexico, from basket cases like Xi’s China.… Read more

I hate to see investors get snared by so-called “rules of thumb” like the 4% rule (which we’ve debunked here on Contrarian Outlook many times before).

The trouble is, these rules only “work” until they don’t. And blindly following them through an unexpected market turn could lead you to investment losses, or to run out of money in retirement.

Heck, some don’t even have a germ of truth to them, like the “100 minus your age” rule, which says you should subtract your age from 100, and that’s how much of your portfolio you should dedicate to stocks. So if you’re 30 years old, 70% should go into stocks and 30% into bonds.… Read more

This entire market meltdown has been based off of a flawed premise. We income investors must take advantage of it, before sanity returns to the markets.

The 10-year Treasury yield soared above 5%. On its journey to the stars the higher 10-year has clipped equities severely along the way. A high benchmark rate upsets every applecart in finance.

But here’s the thing. This is not a sustainable move.

Inflation isn’t really in a spiral higher. In fact, it’s the opposite. Core PCE (personal consumer expenditures)—the Federal Reserve’s preferred measure of inflation—is dropping like a rock:

Fed’s Preferred Inflation Measure is Dropping Fast

Note, this excludes food and energy prices.… Read more

It was the best of times, it was the worst of times. No, I’m not talking about Dickensian London—I’m talking about the mood among investors in our favorite high-yield investments, closed-end funds (CEFs), these days.

Those of us who know what to look for in CEFs are finding a rich hunting ground of big dividends. Yields are up—our CEF Insider portfolio yields an average of 10.2% today—and we’re in a good position to book longer-term profits due to the big discounts still available. (We can thank the cautious folks who invest in CEFs for that—they’ve been slower to buy back in after the 2022 pullback, due to alarmist media headlines.)… Read more

If you don’t like these 10% and 12% dividends, well, you’re not really an income investor.

That’s right. As I write, select closed-end funds (CEFs) yield 12.8%.

Twelve. Point. Eight. Per. Cent!

Vanilla “investors” are panicking. Sentiment has hit washout levels. A short-term bottom is near, or perhaps already in.

We contrarians are staying calm and locking in the 10% and 12% yields. When the market seas become choppy, we stick to our script. Here it is, broken down in a 11-step playbook for these 10.1% to 12.8% yields.

CEF Rule #1: Buy the Best 

Fixed-income behemoth DoubleLine runs some well-known big funds as well as smaller, lesser-known CEFs.… Read more