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

There are plenty of stocks out there, right now, with payouts growing fast—heck, some of them give shareholders a “raise” every three months.

You won’t find these “Dividend Accelerators” among the big names of the Dow.

Many are real estate investment trusts (REITs)—“landlords” of everything from apartments to warehouses. And they’re not just dividend-growth machines; most throw off higher current yields than the typical S&P stock, too.

And I mean much higher: right now, the REIT benchmark Vanguard Real Estate ETF (VNQ) yields 4.1%. The typical S&P 500 name? A sorry 1.6%.

You can thank the Feds for that: they give REITs a pass on corporate taxes as long as they pay 90% of their income as dividends.… Read more

Inflation is falling—but is a recession next, or will we get that vaunted “soft landing” Jay Powell keeps talking about? Wouldn’t it be great if there was a dividend-payer built for either outcome?

Just such an income play exists—it’s called a covered-call closed-end fund (CEF). They’re smart buys now because they pay big dividends: the CEF we’ll break down today—the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX)—yields a healthy 7.8%.

That not only gives us a high income stream, but it also increases our safety, as we’re getting the vast majority of our return in safe dividend cash.

That’s one part of DIAX’s appeal—especially if a recession is headed our way (more on that shortly).… Read more

We contrarians, we’re not ashamed to admit, make our big money dumpster diving for discarded dividends.

When vanilla investors toss trash, it is often our treasure!

I have a hunch this is unfolding in the natural gas market. Prices literally can’t go much lower, which means that eventually they must go higher. Check out this chart—prices are down by 80% in one year!

Nat Gas is Dirt Cheap 

“Natty” prices have fallen from roughly $9 per million British thermal units (MMBtus) to a little more than $2, flattened by unseasonably warm weather and months of dogged supply surplus. Reuters reported in February that “depletion so far this heating season has been around half the seasonal average for the last 10 years.”… Read more

Let’s talk about this banking “crisis” one more time. Because even though it’s starting to fade from the headlines, it’s still giving us a terrific setup for 9% dividends and upside.

What we’re going to talk about today is the very essence of contrarian investing. I’m talking about profiting from the gap between what the media is (often breathlessly!) reporting and what regular folks on the ground actually think.

And if you’ve been to any news website lately, you could be forgiven for thinking this banking issue sounds like it could spark a mass panic and a bank run, taking down the economy with it.… Read more

As we head towards the most telegraphed recession in recent memory, US Treasuries are receiving a lot of attention. And rightfully so.

In recessions, interest rates go down. This boosts bond prices (which trade opposite rates).

But not all bonds are created equal—especially during recessions. Slowdowns tend to make the safest bonds the most attractive.

After all, it can be a slippery slope from slowdown to meltdown, so many investors prefer the safety of Treasuries. In 2008, for example, the S&P 500 sank 38% but US Treasuries rallied sharply. The iShares 20+ Year Treasury Bond ETF (TLT) delivered a 28% gain for the year:

In 2008, T-Bonds Did Great 

I don’t think we’re in for a repeat of ’08, but this “buy Treasuries before a recession” trade has worked superbly since we called it in November.… Read more

Worried the economy is teetering on the brink? I don’t blame you.

Rather than running for the hills, let’s focus on recession-resistant dividend stocks. Big payout growers. We’re talking 25% to 56% dividend growth (yes, that’s no typo).

The safest dividend is the one growing the fastest. Take UnitedHealth Group (UNH), the largest health insurance carrier in the US. Its business is beautifully recession resistant. As a result, UNH is one of the most consistent growth stocks out there. Mark it down for 10%+ gains, per year, every year.

Gains in what? Every metric that matters. UNH’s sales soared 13% year-over-year.… Read more

With yields north of 7%, closed-end funds (CEFs) should be a staple of every American’s portfolio. Especially when you consider that the vast majority of these funds pay dividends every single month.

But the truth is, CEFs remain a niche product—only folks have taken the time to try them out realize what incredible income generators they are. (This is why I started my CEF Insider service: to bust the myths around CEFs and give members a selection of diversified funds they can use to build a retirement-changing income stream.)

Why are CEFs still off most people’s radar? Mainly due to the financial press and financial advisors, both of which have preached for decades that any yield of 7%, 9%, 10% or higher is unsustainable.… Read more

We’re all about the dividends here at Contrarian Outlook. Often we take it for granted that we’re not looking to lose 17% in just a few weeks while we collect income!

BAC Reaches (and Reaches!) for a Bottom …

The share-price chart for Bank of America (BAC) may appeal to dividend dumpster divers. And heck, it may work, as BAC stands to gain as more people pull their savings from regional banks and plunk them into “too big to fail.”

Why deal with this nonsense? This is exactly why we’re fading “cardiac” price charts like BAC’s and shifting toward the smooth and steady growth of dividends:

… While We Climb the “Dividend Staircase”

That’s more like it!… Read more