Warning: These 18% Dividends Are a Trap Ready to Spring

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Warning: These 18% Dividends Are a Trap Ready to Spring

If you’re a dividend fan and you spot an 18% yield, you’re going to sit up and take notice.

But your radar will also probably go up for another reason: you know outsized payouts like that pretty much always come with outsized risk too.

Which brings me to the weird funds I’m going to show you today.

Their 18% average yield masks something shocking: they’re not only dangerous but they’re not even income investments! They’re something else entirely—and if you fail to pick up on that and buy, they could blow a hole in your retirement portfolio.

Let me explain, starting with…

Where We Found These 18% Payouts

The funds I’m talking about are called exchange-traded notes (ETNs), a close cousin of exchange-traded funds (ETFs), another asset class I recommended staying clear of in a September 12 article.…
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3 BDCs Paying 10%+: 2 Hopefuls, 1 Hopeless Wreck

Business development companies (BDCs) are dividend powerhouses that typically yield anywhere from high single digits to low double digits. And in fact, the group of three BDCs I’m going to show you today each throws off a yield of more than 10%!

But most investors – even income-seeking folks – aren’t familiar with them. If that includes you, or you’re just looking for safe 10% yields or better, read on.

BDCs were created in the 1980s by the U.S. government to help small- and midsize businesses finance their growth – via debt, equity and other financing. And by doing so, they also help create American jobs.…
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Three BDCs Paying 12% to 16%: 1 to Buy, 2 to Sell

Most business development companies (BDCs) have low profiles on Wall Street. Their relative obscurity makes them good vehicles for banking high yields – in fact, today we’ll discuss three that pay between 12% and 16% annually.

BDCs invest in small- and midsize businesses, the building blocks of entrepreneurial America. They were created by the government in the 1980s to help grow up-and-coming companies in a bid to stimulate business and create jobs. They provide debt, equity and other forms of financing to businesses that larger banks and investment firms shy away from.

They’re also income machines by law.

Their regulated structures require them to dole out 90% or more of their taxable income to shareholders in the form of dividends.…
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