Frustrated by the Pullback? Buy This Cheap 10.1% Payer Now

Michael Foster, Investment Strategist
Updated: October 5, 2023

I get it: we’re all frustrated with this sluggish stock rebound. It’s been almost two years since stocks last hit all-time highs, and the S&P 500 is still sitting some 11% below the peak!

So let’s take a look at what’s behind this patience-testing market—and unpack a smart contrarian dividend play to take advantage.

2023 Is Not 2020 (or 2018)

Today’s frustration is understandable because over the last decade, we’ve grown used to markets that bounce quickly after a crash, with the 2020 COVID crash-and-rebound being the classic case. And we recovered so quickly from the 2018 pullback that you can be forgiven if you forgot about that one entirely!… Read more

Panic? Maybe Later. Let’s Buy This 11.9% Dividend Instead

Brett Owens, Chief Investment Strategist
Updated: October 4, 2023

Please, take that finger off the Sell button.

This is the best buying opportunity since the bank failure panic in March. Vanilla investors are giving away perfectly good dividends.

Let’s grab the bargains.

Why the panic? Well, the 10-year Treasury yield burst through the 4.3% ceiling I’ve been pointing to. This is why stocks sank. All lending and refinancing are based on the 10-year, so a higher rate suggests a slower economy ahead and lower corporate profits.

When the 10-year moonshots like it has over the past year, it breaks financial markets. Bonds drop because they trade opposite rates. Real estate investment trusts (REITs), meanwhile, get hammered for two reasons.… Read more

How to “Refinance” Your Dividends (for Cheap 8%+ Yields)

Brett Owens, Chief Investment Strategist
Updated: October 3, 2023

Were you able to refi your home when rates were low? I hope so.

Don’t tell my wife, but we almost missed the low-rate era. My better half kept asking about refinancing. “Yeah, yeah,” I said. “We will when rates bottom.”

In early 2021, they took off right under my nose. I stare at the bond market all day and nearly missed this thing!

Fortunately, we got a pullback in rates. I called my buddy, a mortgage broker, who dialed me in with a sweet 2.2% rate on our remaining balance. Two point two!

Had we missed that deal, I’d never live it down.… Read more

Don’t Fear DC Drama: Play It for Cheap 7.5% Dividends (Here’s How)

Michael Foster, Investment Strategist
Updated: October 2, 2023

What happened to the stock-market rally? Simple: it’s been undermined by two overdone fears: of a housing-market correction and worries around a government shutdown.

But well reported-on events like these rarely have the big impact most people think they do. In fact, this pullback in stocks is a buying opportunity, particularly in high-yield closed-end funds (CEFs).

Don’t Buy the Gloom Narrative Around Stocks

Before we get to potential strategies and buys, I do have to say one thing: don’t let anyone tell you stocks are doomed. This year has too much positive sentiment, and the S&P 500 still hasn’t reached all-time-highs, so this isn’t a pause in a bull market.… Read more

How to Snag Yields Up To 13% Without Sticking Your Neck Out

Brett Owens, Chief Investment Strategist
Updated: September 29, 2023

It’s a great time to be an income investor. We have yields averaging 11.1% staring us in the face.

All we need to do is step past the broader fear, and we can dial in these dynamic dividends. Which oh by the way, pay us monthly.

To do so we’ll look past traditional ETFs in favor of select closed-end funds (CEFs). These vehicles simply pay more than popular funds. Plus, they tend to be more closely managed—a good thing in manic markets like these.

Getting paid every 30 days smooths out our dividend income. This is what a vanilla portfolio of quarterly payers looks like.… Read more

3 Strategies for a Flat Market (and a 12.8% Payer for Whatever Comes Next)

Michael Foster, Investment Strategist
Updated: September 28, 2023

There are reams of investment strategies out there for maximizing gains in a rising market and protecting ourselves when stocks tumble. But what do we do when markets simply grind sideways?

That’s what we’re going to delve into now, with three potential moves. Our favorite of these three involves buying a closed-end fund (CEF) yielding 12.8% with a payout that’s actually grown over the long haul.

September Swoon Not Unusual

So far this year, we’ve seen the S&P 500 come close to recovering 100% of its losses from last year, only to pull back in recent weeks. Even though this has made for a bit of a stressful September, it’s pretty normal; market recoveries often result in a slow and tentative return to a previous all-time high.… Read more

The Maraschino Cherry of Bond Funds Yields 9.5%

Brett Owens, Chief Investment Strategist
Updated: September 27, 2023

“Do you have cherries?” my buddy Ralph asked over the phone.

It was January 2021. Sports bars here in California were closed, so we naturally turned our backyard into one.

“No,” I replied. And sighed in an honest admission. “Only beer. Lots of beer.”

“No problem. I got ‘em.”

My buddy also had a mini-keg of delicious old-fashioneds. His creations were dangerously delicious. He’d begun making and aging fine adult beverages to pass time in the pandemic.

And the maraschino cherries he brought played no small role in his cocktail’s critical acclaim.

Is it five o’clock yet? Just kidding (mostly). We are talking about maraschinos in a dividend column because we finally have some bond funds worth cherry picking.… Read more

My #1 Hack for “Baked-In” Gains (and 9% Dividends) in CEFs

Brett Owens, Chief Investment Strategist
Updated: September 26, 2023

If there’s one thing we need to remember when we buy high-yield closed-end funds (CEFs), it’s this: always demand a discount.

Well, make that two: always demand a high dividend! Because CEFs are renowned for their high—and often monthly—payouts, with the average CEF yielding around 8% today.

But back to discounts. Luckily for us, they’re common in the CEF world: of the 433 CEFs tracked by the CEF Connect screener, some 390 trade at discounts to net asset value (NAV).

These discounts are basically free money because they let us pick up, say, Mastercard (MA) for 83 cents on the dollar through a CEF like the Gabelli Dividend & Income Trust (GDV).Read more

1 Simple Move to Buy Corporate Bonds With 9% Yields (at 12% Off)

Michael Foster, Investment Strategist
Updated: September 25, 2023

The big jump in stocks—especially tech stocks—this year has proven the forecasts of imminent and dire recession that were seemingly everywhere in 2022 dead wrong.

Unfortunately, those predictions caused the investors who followed them an opportunity for gains (and dividends, too). And now many are likely wondering if it’s too late to get back in, prolonging the suffering.

If you’re one of them (or even if you’re just looking to diversify), let me give you a lower-volatility, higher-yielding option: corporate bond focused closed-end funds (CEFs).

How Corporate-Bond CEFs Work

To get a grasp of how corporate-bond CEFs work, we need to start with corporate bonds themselves.… Read more

Drugs ‘n Diapers: 5 Dividends Up to 5.9%

Brett Owens, Chief Investment Strategist
Updated: September 22, 2023

Worried that the Federal Reserve is driving our economy off a cliff?

I’ve got two words for you:

Drugs ‘n diapers.

Actually, I forgot one. Dividends.

These companies are about as recession-resistant as they come. Let’s start with drugs because, well, it’s always a bull market on prescription spend in America:

Source: Centers for Medicare and Medicaid Services

While some of us are popping pills, others are changing diapers. (Or using them—we don’t judge!)

Without naming names we can see that someone is making consistent deposits. The trajectory of diaper spend is a one-way trade, too:

Data source: Statista Market Insights

Let’s start on the changing table with a 2.5% payer and work our way up.… Read more