Stocks are up, the economy is in shambles and lockdowns are making a comeback. But people are also being vaccinated as I write this, just 12 months after we learned that COVID-19 was even a thing.

How do we invest through this transitional market? I’ve got a three-point plan for you that works in any economy—not just the Twilight Zone one we’re living in now.

Step 1: Start With “Tollbooth Stocks” and Build From There

Tollbooth stocks are the kinds of companies we safety-conscious dividend investors love: they hold the infrastructure—think pipelines, warehouses and data networks—big players like, say, Amazon.com (AMZN) must have to operate.… Read more

Markets are betting on the federal government pumping $908 billion in stimulus into the economy. If that cash wave rolls out, it’ll boost the group of funds I want to talk to you about today. They pay dividends of 6%+ and trade at big discounts to their true value now.

The Current Stimulus State of Play

First up, while the final stimulus bill is still being negotiated by Congress, it seems likely we’ll get a version similar to what’s been released already when a compromise is reached. So let’s take a look at what’s on offer.

Before we go further, I’ll say that the government’s new stimulus bill looks more effective than the CARES Act passed in the spring.… Read more

Real estate investment trusts (REITs) as a group have been kicked to the curb this year. The sector has returned negative 1.3% including dividends—third-worst among the S&P 500’s 11 sectors, and miserable showing compared to the index’s 16.5%.

But note that I said “as a group.” Some landlords are doing just swell.

The secret to REIT picking, right now, is to identify the companies that are still collecting payments like it’s 2019.

Here’s NAREIT’s most recent rent-collection data, covering rents collected between April and September—all of our newly completed “shutdown” and “re-opening” and “just kidding, we’re closing again” months.

Source: Nareit

You’ll notice that NAREIT didn’t bother calculating some categories.… Read more

With 2020 coming to a (merciful) close, it’s a good time to take a moment to cast an eye over our dividend portfolios.

One thing to pay particular attention to: the amount of cash you’re holding. Because if you’re like many investors I’ve talked to recently, you’re holding too much of it—and that can cause a steady wealth drain that bleeds away thousands in returns every year!

Taking Money Off the Table—at Exactly the Wrong Time

Of course, having a healthy cash cushion is always a good thing. The trouble for most folks, though, is that they’ve been growing the amount of cash they have outside the market just as stocks have taken off.… Read more

Imagine investing a million dollars and getting back… a pathetic $16,000 in income every year.

You don’t have to imagine—because that’s exactly what you’d get if you bought the average S&P 500 stock today, which yields a sad 1.6%. That’s not much and these days, you can lose that in one afternoon!

No wonder dividends get no respect!

But I’ve got good news: that 1.6% doesn’t matter a bit to us. In fact, it’s a distraction from the real opportunity I want to show you: a dead-simple, 3-step shot at a much bigger payout.

I’m talking about 6%+ in cash here.… Read more

The mainstream crowd has gotten way too greedy—which means we could be in the teeth of a stock-market selloff within weeks.

Most folks hear the word “selloff” and gasp. But not us contrarian dividend hounds! We know that volatility is our friend. It’s easy to see this just by looking at what the market’s done in the last five years. You’d have amped up your performance a lot just by buying the dips.

Buy and Hold? Nah. The Timing of Your Buys (and Sells) Matters

This year is a classic example. If you’d bought the typical S&P 500 stock on the first day of February, pretty much at the go-go peak of early 2020, you’d be sitting on a 15% total return now.… Read more

If you’re like most people these days, you’re desperately searching for any kind of meaningful dividend stream.

Finding one is no easy task. The S&P 500, after all, yields 1.5%, on average. Treasuries? With their 0.9% yields, they’re not even worth talking about.

With the old income go-tos off the table, plenty of folks are looking further afield. Some are boosting their holdings of high-yield bonds through exchange-traded funds like the SPDR Bloomberg Barclays High Yield Bond ETF (JNK). Others are going with more esoteric investments, like high-yielding business development companies (BDCs), which you can tap through the UBS Etracs Business Development Company ETN (BDCS).… Read more

When April 1 rolled around, many mortgage payments were made late. That was no joke—we were in the midst of our first (and most serious) round of lockdowns.

Who knew what bills were going to get paid, if any?

Mortgage REIT (mREIT) stocks, which require mortgages to actually be paid, suffered broadly and badly. Some shares, such as industry bellwether Annaly (NLY), dropped as much as 60% in just more than a month. This plunge crushed many income investors, who rely on the fat dividends paid by the sector (11.2%, on average!) to fund their retirements.

Now, mREITs don’t actually own or operate any real estate (unlike their REIT cousins).… Read more

What exactly are we to do in this levitating market? Buy more? Pull back? Do nothing?

I get why most folks are uneasy these days—they’re seeing the stock market, and particularly tech stocks, heading into the stratosphere, while the economy that supports them is a mess. Stocks can’t hang in midair forever, the thinking goes. Eventually they’ll plunge to earth.

A (Pleasant) Surprise in a Lousy Year

Don’t buy this argument. Because in the weird market we’re in, stocks can not only hover but actually rip higher and hand us growing dividends, too. Let me show you what I mean, starting with the economy.… Read more

Is the 60/40 (stock/bond) portfolio now 100/0 in favor of stocks?

That’s been the subject of several financial headlines lately. The authors are suggesting that the traditional mix of 60% large-cap stocks and 40% safe bonds won’t generate enough money for us to retire on unless we’ve got a cool $10 million or so. And, they’ve got a point, with the S&P paying less than 2% and US Treasuries yielding under 1%.

But even a 100/0 portfolio won’t help you too much. Put it all in the popular SPY ETF, and we’re still under 2%! Plus, this “heart attack kid” can fluctuate by 1% or even 2% per day.… Read more