The Maraschino Cherry of Bond Funds Yields 9.5%

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The Maraschino Cherry of Bond Funds Yields 9.5%

“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

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

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

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

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

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Drugs ‘n Diapers: 5 Dividends Up to 5.9%

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

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Drugs ‘n Diapers: 5 Dividends Up to 5.9%

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

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These 8%-Paying Funds Are Doing Something Truly Bizarre

When I explain the appeal of closed-end funds (CEFs), I usually start with the big headline and throw a few bullets afterwards, kind of like this:

CEFs yield an average 8%, and many of those dividends are sustainable and growing.

  • CEFs invest in a variety of reliable and popular assets, like stocks, bonds and real estate investment trusts (REITs).
  • CEFs often trade at discounts to the value of their portfolios. This is known as the discount to net asset value (NAV), and it means we can buy stocks, bonds and real estate through CEFs for less than we’d pay on the open market.

… Read more

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5 Steps to Turn $500K Into $41,553.73 Per Year

$500K can be enough money to retire on. Even as early as age 50!

The trick is to convert the pile of cash into cash flow that can pay the bills. I’m talking about $41,553.73 per year in dividend income on that nest egg, thanks to 8.3% average yields.

These are passive payouts that show up every quarter or, better yet, every month. Meanwhile, we keep that $500K nest egg intact. Or, better yet, grind that principal higher steadily and safely.

Got more in your retirement account? Cool—more monthly dividend income for you!

We’ll talk specific stocks, funds and yields in a moment.… Read more

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4 Reasons Why REITs Will Soar in 2024 (and 2 Tickers to Buy Now)

Over the last few days, not one but three signals I use to read the tea leaves in REITs—one of our favorite places to hunt for big, and growing, payouts—all flashed “buy.”

That means it’s finally time to start selectively picking up these income plays. I’ll name two with dividends on multi-year growth runs below. Tickers in a sec. First, let’s talk timing. Here’s why REITs are jumping up our dividend priority list now:

  • They haven’t followed stocks higher in ’23—so our “landlords,” which own everything from shopping malls to warehouses, apartment buildings and cellphone towers, are cheap in relation to the popular kids of the S&P 500.

… Read more

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This Looming “Fed Shift” Will Ignite These 8%+ Payers

All year long, we’ve been waiting for our favorite high-yield investments, 8%+ yielding closed-end funds (CEFs), to jump, along with the rest of the market.

Now, nearly nine months in, we’re still waiting! It’s not surprising: the income-focused investors who buy these funds are typically a cautious bunch.

Not that we mind at my CEF Insider service. We’ve been taking advantage of the extra time to pick up bargain funds and build our income streams. As I write this, our CEF Insider portfolio yields around 9%, with many of our picks paying dividends monthly.

But a fresh report from the Federal Reserve Bank of Chicago is a sign the CEF train could be about to leave the station.… Read more

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A Utility Resurgence? 6 Stocks Yielding up to 8.9%

Utility stocks are the OG dividend payers. They’re delightfully dull. They’re dependable. They’re always worth scouting for income—and I’ve got six 5%-plus dividends on deck to share with you today.

I’m pleasantly surprised that we still have a chance to buy utilities for reasonable prices right now. Despite a year’s worth of worries about a pending recession, utilities have been the market’s worst sector year-to-date.

Perfect. We have value!

Utilities have worked off the froth I pointed out a year ago. Let’s just look at the forward P/Es from this year and last.

Sept. 10, 2022: Utilities Forward P/E: 20.9 S&P 500 Forward P/E: 17.7

Sept.… Read more

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