“Regular” REITs typically buy physical properties, find someone to manage them, and lease them out. They collect rent checks and avoid paying taxes on most of these profits if they distribute 90% of their profits as payouts. This is the reason REIT stocks typically boast big yields.

Mortgage REITs (mREITs), on the other hand, don’t own buildings. They own paper. Specifically, they buy mortgage loans and collect the interest. How do they make money? By borrowing “short” (assuming short-term rates are lower) and lending “long” (if long-term rates are, as they tend to be, higher).

This business model prints money when long-term rates are steady or, better yet, declining.… Read more

If you’re worried the stock market is too expensive, well, I agree with you. This is why we’re going to discuss my two-step “12% Dividend Plan” today—so we can bank big yields without having to worry about a pullback.

Best of all, we can collect this income without having to sacrifice principal. In fact, our nest egg will generate some nice upside in addition to these big dividends.

But first, a reality check. A yield north of 12%? How the heck is that possible?

I realize it sounds like a pipe dream—especially with the S&P 500 trading at a nosebleed 31-times earnings and yielding a miserly 1.3% as I write this.… Read more

Overbought stock markets—and pathetic 1% dividends—here in the US just might have you tempted to look overseas for higher payouts.

It’s a smart move. After all, plenty of countries offer investors higher dividends than America. For example, the yield on the FTSE 100 index, which consists of the 100 biggest companies on the London Stock Exchange by market cap, is 3.4% today, nearly triple the average S&P 500 payout of 1.3%.

(And you can get strong diversification across the globe—with a strong North American base—when you buy the 8%-yielding fund we’ll get to shortly.)

But as we discussed a couple weeks ago, we need to steer well clear of (or at least be very careful with) any exposure to China, because as fast as the country’s growth has been, the governing Chinese Communist Party’s respect for free markets is questionable—and has been growing more so of late.… Read more

Investors are suffering from dividend anxiety, searching far and wide for extra income to help compensate for low yields.

Could 10%+ Yielding Mortgage REITs help calm the jitters?

The yields offered by the S&P 500 or safe government bonds are near decade lows.

Even REIT investors are getting squeezed, with the average dividend yield now at about 2.4%.

Simply put, the majority of income provided by safe bonds, high-yielding equities, or REITs may not provide the income needed to meet retirement goals.

However, I’ve found a better path to the retirement promised land. 

There is one area of the REIT market that can provide exceptional yields and in some cases more than 4x the income of the average equity REIT, and 8x that of the S&P 500.… Read more

“Son, I am old. But I am not dead!”

There was a pause.

“Now get me another beer…”

His 40-year-old “boy” froze, then complied. I, meanwhile, busted out in laughter.

Is there anything better than a dad that likes to party? I challenge you to think of something while we discuss the next best thing.

A safe, secure stock that delivers 4,000%+ gains.

Plenty of financial hucksters promise to reveal “the next Amazon,” “the next Facebook” or “the next Tesla.” We income investors know better, however. We can double our money—quickly—over and over again. We just need to find “the next Bank OZK.”… Read more

Something weird is happening in the housing market, and it’s handing us an outstanding opportunity in stocks (including the 8%-yielding pick we’ll dive into shortly).

I know that’s an odd statement. After all, how can housing and stocks really be that connected? And how can we be so optimistic about housing when it has already soared in the last 18 months, and bubble warnings are everywhere?

The answer is that, as we contrarians know, the way the headlines make things appear in the markets is often very unlike how they actually are.

Look at the chart below, which shows, on the right, the average monthly mortgage payment over the past 45 years, in five-year increments, on the typical home (using the median average house price for each year, minus a 10% down payment).… Read more

I saw this headline float across my Bloomberg Terminal late last week…

There Are More 401(k) and IRA Millionaires Than Ever

(Disclosure and digression: My “Terminal” is Bloomberg.com on my phone. I can thank my long wait at the DMV for my California REAL ID for this story.)

Fidelity Investments—apparently happy to share its customer’s financial info anonymously—says it has more than 750,000 seven-figure 401(k) and IRA accounts.

A chunk of money is great, especially when we can leave it untouched and let it grow. That was no doubt the “secret” of 99%+ of these retirement millionaires. They socked away money for decades and rode the market higher.… Read more

The recent oil correction has opened a window for us income investors to grab big(ger) dividends at big(ger) discounts! Today we’re going to take full advantage.

In a moment, we’ll discuss a 3-click energy dividend portfolio that yields 5.9%. Plus, we have some price upside in addition to these payouts, thanks to the pullback in the energy sector.

There’s no doubt the goo has taken a header, dropping from $75 a barrel in mid-July to $62 as I write this. But that’s overdone: consider that our “crash ’n’ rally” scenario (which I’ve been arguing with anyone who will listen for 16 months now) is still in early days.… Read more

It’s hard to believe, but there actually is a 10% dividend sitting right under investors’ noses—even now, when the typical S&P 500 stock dribbles out a pathetic 1.3% payout.

That 10% payer is a closed-end fund (CEF) called the Liberty All-Star Equity Fund (USA). We’re going to put this fund in the spotlight today, so we can see how it offers such a large dividend in these income-lean times, and whether it may be for you.

Let’s start with performance: USA has delivered a total return far larger than that of the market in the last five- and 10-year spans (as well as in the last three years, one year and for 2021 so far).… Read more

Your next Amazon.com box could be fueling a dividend—and stock price.

Talk about delivery-powered dividend growth! In the US, 3 billion e-commerce packages were delivered in 2020. And its not just Amazon (AMZN).

Brick-and-mortar retailers have finally realized that they must answer Amazon with convenient deliveries. Smart retailers such as Walmart (WMT) and Williams-Sonoma (WSM) have figured out that “omni-channel” (in-store and online) is the future.

They’re the types of companies that will survive the “great reset.”

E-commerce swallowed brick-and-mortar market share over the past decade, making up just 6.4% of retail sales in 2010, but a whopping 15.8% in 2019.… Read more