The yield on the 10-year Treasury is exhausted after its epic run to nearly 1.2%. It’s due for a breather.

Anyone who buys the long bond today can still “lock in” a 1.1% yield. But remember, this bounty won’t escape the tax man. Any interest income we earn from Treasuries—no matter how sad—is subject to federal and state taxes.

So, if we’re multiplying your nest egg (let’s use $500K) by 1.1%, we must remember that the final answer is probably not $5,500 in annual income. Because if we’re raking in income from any other sources, we should lop off a chunk of this for taxes.… Read more

Long-term interest rates have awoken. The trend toward higher Treasury yields is likely just getting started, which makes 2021 an “inflection year” for us income investors.

And what better way to celebrate the paradigm shift than to buy dividend payers that are likely to double (or better!) in the months and years ahead?

Sure, some fixed-income plays are going to be punished. That’s a topic for another time. Today, we should focus on shareholder-yield darlings that see their profits increase in an outsized manner when interest rates climb.

I’m talking about stocks that will shower us with:

• Current yields today,
• Dividend raises tomorrow,
• Generous stock buybacks, and (most importantly)
• Share prices that will climb dramatically.

Now that the Democrats control the House, Senate and the White House, you’re probably wondering what the new administration means for your tax bill—and your portfolio.

There’s good news here, and it comes in two parts: first, the tax hit likely won’t be as much as you think (if you notice it at all!). And second, Biden’s tax plan has quietly boosted the municipal-bond market, where there are scores of tax-free dividends waiting for us. And it’ll likely boost it even more in the months ahead.

First Up, Your Tax Bill

The takeaway is that, while there are some changes in the tax code in Biden’s latest plan, taxes will remain lower than they were when President Trump first took office.… Read more

As Wall Street loses its mind over a long bond that pays a lousy 1%, we level-headed income investors are going to stay calm. And 7.7% on.

Yes, we “prefer” (hint, hint) dividends that are 7X the weak 1% yield the wonks are clamoring about. I’ll get to the specifics on these retirement makers—which we can buy as easily as common stocks—in a moment. First, let’s appreciate their dividend grandeur.

The Fed is content to sit on a near-zero benchmark rate until at least next year if not 2023. Compounding the problem is that yields on traditional blue chips, while always insufficient, are a downright mockery right now—the 1.55% current yield on the S&P 500 is its lowest point in 15 years.… Read more

If you’re like most investors, you’re tired of having the following two pieces of “wisdom” pounded into your head by the financial media:

1. Any high yield (here I’m talking 6% and up) is dangerous and certain to be cut, and …
2. Hardly anyone ever outperforms the S&P 500, so why even try?

Both are nonsense.

Fact is, you can get steady yields of 7% and higher (or even 8.8%, as I’ll show you shortly) through several high-yield funds called closed-end funds (CEFs). (If you’re a member of my CEF Insider service, you already know this: our portfolio of 20 CEFs is handing us an average dividend of 7.7% today, with the highest yielder of the bunch paying an outsized 11%.)… Read more

This time last week, we talked about my favorite dividend stock for 2021. The stock yielded 6% as recently as June, but it (deservedly) gained a following among income investors in recent months.

These newcomers bid its price up (again, deservedly). In doing so, its yield shrank below 4%, and I recently found myself apologizing to my Contrarian Income Report subscribers for discussing a stock that paid so little by our admittedly lofty standards.

Well, I’m glad I brought it up to them and to you in these pages last week, because Synovus (SNV) soared 11% over the next three days.… Read more

Let’s start 2021 with a proven strategy for grabbing two growing income streams in one buy. Plus, we’ll nicely set ourselves up to bank double-digit price gains to boot.

The strategy? Simple: we’re buying dividend-paying stocks poised to spin off one of their businesses into a brand-new dividend-paying stock. When that happens, we wind up with two or more quarterly dividends where there used to be just one.

Two other things you should know: our “new” dividend(s) will likely grow faster than our original payout! And we won’t have to do anything to get this extra cash.

I’ll give you a telltale sign to look for as we move to front-run the next “dividend split” in a moment.… Read more

With China handily beating the coronavirus while pretty well every other country struggles to contain it, you might be considering buying Chinese stocks now.

It seems like a no brainer, right?

Unfortunately, such a move would be a mistake—especially if you’re lured by the siren song of the closed-end fund (CEF) I’ll name below. Because there’s a gathering storm that’s threatening the country’s stock market and economy, and few people are talking about it.

Funny thing is, despite all the so-called advantages China’s companies are supposed to have: lower operating costs and lower regulations among them, these stocks have never really delivered.… Read more

For income investors, dividend strategies don’t come any easier than the “Dogs of the Dow.”

But does this simple technique still work?

We’ll look at the 2021 Dogs, and their attached dividends (and prospects) in a moment. Their yields aren’t too shabby, averaging 4.1% in a 1% world! First, let’s review the mechanics of the popular contrarian strategy:

• Step 1: After the final trading day of the year, we identify the 10 highest-yielding stocks in the Dow.
• Step 2: We buy all 10 in equal amounts.

That’s it. In just a couple of quick steps, executed just once every year, we can put together a mini-portfolio of 10 blue-chip stocks that typically out-yield the S&P 500, and currently offer 2.5 times more dividends than the broad market index.… Read more

Let’s look at how we closed-end fund (CEF) investors can grab a healthy 6%+ dividend in this zero-rate world and dodge every retiree’s nightmare: that would be having your nest egg run out with years of retirement still to go!

We can pull this off in part because the dividend story is not as grim as most people think. In fact, S&P 500 dividend payments actually hit a new all-time record in 2020!

That’s right: in a year when many long-time dividend payers cut or suspended payouts, the market handed over the highest amount of dividends ever.

Popular Stocks’ Dividends Plunge, Then Rebound …

If you held an ETF that tracks the S&P 500 index, like the SPDR S&P 500 ETF Trust (SPY) or the Vanguard S&P 500 ETF (VOO), you might find this hard to believe, especially when the current yields on the typical S&P 500 stock dropped to its lowest point in a generation.… Read more