Got $15 or $20? If So, These Stocks Pay Up to 11.1%

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Let’s talk income investments that are usually reserved for rich folks: deal-making private-equity (PE) funds!

Usually there’s a sizable fee to get into PE. Unless you know the secret knock at the back-door entrance, which is more our style anyway.

I’m talking about yields from 7% all the way up to 11%. With a cover charge as low as $15!

These business development companies (BDCs) exist thanks to a perfectly legal loophole that lets anyone with an IRA or brokerage account tap into not just one or two private-market companies, but dozens at a time. Instead of shelling out hundreds of thousands of dollars to hit a PE fund’s minimum buy-in, this access typically starts at about $15 to $20 per share.… Read more

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Private equity (PE) is a rich guy and gal favorite. PE firms find deals and deliver outsized dividends.

They don’t like dealing with common folk. So, PE shops typically set a minimum of a few hundred thousand dollars or so to invest.

But we contrarians have a better way! By tapping BDCs—or business development companies—we can toss as little as $20 into a PE payer.

Better yet, we can secure yields between 8.5% and 13.1%. We’ll discuss three examples today. Including one that is trading below book value!

If you’ve never heard of business development companies (BDCs), you’re not alone. There are only a few dozen publicly traded BDCs, and even the largest one would be a minnow in the S&P 500.… Read more

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Since traditional banks have backed off on business lending over the years, BDCs (business development companies) have stepped in. They provided much-needed debt, equity, and other financial solutions to small businesses—and much-needed income to dividend investors.

As an asset class, BDCs yield 8%. We’ll discuss three popular payers—with dividends up to 8.3%—in a moment.

Congress whipped up BDCs with a few pen strokes in 1980, creating a structure that’s incentivized to provide smaller companies with financing. BDCs receive special tax privileges, and in exchange, they must return at least 90% of their taxable profits to shareholders as dividends.

If that sounds familiar, that’s because that same tradeoff is enjoyed by real estate investment trusts (REITs), which were formed the same way, 20 years prior.… Read more

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It is challenging to find stocks that pay enough money to retire on. For example, even a 3.3% dividend—generous by today’s standards—isn’t enough to turn a $1,000,000 into an income stream that will last forever.

I’ll save you the math. It’s just $33,000 per year on a million dollars.

Fortunately, this same dividend yield is understated on most mainstream financial websites. In reality, this stock paid 7.7% over the past twelve months. Which means its millionaire investors actually earned $77,000 in dividend income.

Yes, you read that right. There was an extra $44,000 hidden in plain sight thanks to a “special” dividend payment.… Read more

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Mortgage payments. Car payments. Cell-phone bills. Power bills. Water bills. Credit card bills.

Yuck. They’re the only downside to being retired!

These bills show up (or debit our accounts) every single month. That’s OK when we have a normal j-o-b that pays us every couple of weeks, or every month. But this regular bill gets really old when we retire.

Like you, I prefer to retire on dividends (and leave my nest egg alone). Problem is, most dividends are paid out every quarter, not every month.

So, dividend cash flow is (unfortunately) often out of sync with every-30-day expenses.

Some income investors build out complicated dividend calendars that get knocked out of whack whenever they ever have to sell certain stocks.… Read more

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Four years ago, I published an article detailing how a young upper-middle-class professional could quit working and still survive on dividends alone in just five years. It was a claim that many folks thought was impossible to achieve (and they told me so in the comments!).

But history has proven that, in fact, it was true.

Today I want to show you how following the advice I gave back then would have produced financial independence (or an income stream that could cover basic needs) in just five years—and how you can replicate that same success today.

How It Works

Back then, I made three arguments:

  1. A young professional earning $70,000 a year and, being very disciplined, managed to save about two-thirds of that income, could use the stock market to build a substantial nest egg in half a decade.

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Mainstream financial channels have made a big deal out of the current, furious relief rally (“Is it a ‘V-shaped’ recovery?” they muse). Whether it’s a V, a W, an L, a Nike swoosh or (my favorite) a bathtub, the fact is that many cash flows—and hence the dividends they fund—are under siege.

(This is no surprise. The average bear market lasts 12 to 18 months. We are just beginning month three—yikes.)

But all hope is not lost! We can still find secure yields, even reliable monthly dividends to boot, right now. In a moment, we’ll sift through the market’s trash heap to find these valuable sources of income stability.… Read more

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If you want to live off dividends in retirement, you can’t depend on “blue-chip stocks.” They simply haven’t paid enough yield for years:

Even High-Yield Savings Accounts Start to Look Good at These Levels

Source: Multpl.com

The S&P 500’s yield recently hit 1.7%. Think about it in “retirement spending” terms. If you took an entire million-dollar nest egg and put it in the S&P 500, you’d be looking at just $17,000 in dividend income per year. If you have even less to invest, like $500,000, that’s just $8,500 a year—several thousands of dollars below the U.S. Department of Health & Human Services’ poverty guideline of $12,760!… Read more

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Mortgage payments. Car payments. Cell-phone bills. Power bills. Water bills. Credit card bills.

What do they all have in common?

Nobody likes them, of course. But more importantly, they all arrive relentlessly month after month.

That’s fine when you have a normal job that pays you every couple of weeks or every month. But that regular bill routine becomes considerably more daunting once you hit retirement, when much of your regular income is coming from your portfolio of dividend paying stocks … which pay out every quarter, not every month.

Investors in turn often build complicated dividend calendars that get knocked out of whack whenever they ever have to cut back on certain stocks.… Read more

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Most income investors find their way to business development companies (BDCs) by screening or searching for big yields. And there’s no doubt these listed payouts do appear impressive! Here are the five largest BDCs (ranked by assets under management):

A first-level look at this table may have you wondering why anyone would buy MAIN when they could nearly double their dividend by choosing another ticker. Well, there’s a good reason that we’ll get to in a minute. First, let’s talk about what BDCs actually do so that we can understand what is driving these big dividends.

It all started in 1940, when Congress passed the Investment Company Act.… Read more

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