How ETF Investing Could Cost You Thousands in Gains (and 6%+ Dividends)

Our Archive

Search completed

It’s a tired piece of “wisdom” you hear from personal-finance gurus over and over: you need to invest in low-cost, passive index funds to get the highest return.

Too bad it’s completely false!

Today we’re going to look at how obsessing over fees can cost you tens of thousands of dollars. Then I’ll name a fund that could get you big gains and pays a dividend north of 6%.

What’s more, this unusual fund, a closed-end fund (CEF), to be specific, gives you that steady cash payout while holding some of the biggest stocks out there—I’m talking about household names like Apple (AAPL) and Amazon.comRead more

Read More

If anyone tells you that all the big dividends have been bought up in this inflated market, do yourself a favor: tune them out.

Because while stocks are up—and dividend yields are down as a result—there are still high, cheap payouts to be had out there. And we closed-end fund (CEF) investors know exactly where to find them. In a moment, we’ll nail down a couple of funds that are still attractively priced today, and they pay you 6%+ dividends, to boot.

That said, deals certainly aren’t falling out of trees in CEFs these days—we have to dig deeper to uncover them than we ever have before.… Read more

Read More

As dividend investors, we don’t usually read the tea leaves in employment reports (that, after all, is the domain of economists!). But there is something happening in the working world that’s set to power the payouts, and prices, of a select group of closed-end funds (CEFs) for years to come.

That is this: people are spending less time in the office. But productivity isn’t falling. And of course, demand for workers is surging right now, setting the stage for pay hikes, bonuses, stock options—just about any way to put more money in workers’ pockets that you can think of.

Employment Roars.Read more

Read More

I had just spent my whole paycheck at Whole Foods. My wife was not amused.

“Brett,” she paused and trailed off, a telltale sign that I was in the hot seat.

“You don’t have to buy everything organic. Some stuff…” she searched for words, shaking her head.

I flailed for a life raft: “But isn’t organic good?”

“Some fruits, sure,” she conceded. “And vegetables. But not all of them. Like avocados, and bananas—they have thick skins, so it really doesn’t matter if they are organic or not.”

“And cookies. Cookies are a highly processed food. Why are you bothering with organic?”… Read more

Read More

As dividend yields and interest rates dropped in recent decades, income investors looked for ways to generate cash flow from stocks. Selling (“writing”) covered calls is one strategy that has gained attention.

It is certainly a conservative options strategy that most income investors think they should do. The math is compelling.

Here’s how it works. We would buy a dividend stock like Exxon Mobil (XOM) for its $0.87 per share quarterly payout (a 6% yield). Then we would write a covered call with a “strike” price just above the stock’s current level.

For example, XOM trades below $60 as I write.… Read more

Read More

Inflation worries are everywhere, so let’s dive into what’s behind them—and what we contrarian income-seekers should do right now. The three steps I’m about to show you could hand you a lot of fresh dividend income and price upside, too—even in this (still) overstretched market.

First up—is inflation a real fear right now? Let’s look at the numbers.

Inflation Rises Sharply …

That chart—and shortages of everything from microchips to ketchup—sure seem to indicate that a continued rise in prices is on the way.

But there’s a caveat: this chart compares today’s inflation rate to that of the crushed economy of last year, not to mention those supply-chain issues, which are likely to get ironed out as more of the economy reopens.… Read more

Read More

There’s a “retirement shortcut” far too many people ignore—and it could let you hang ’em up a lot sooner than you think (and with a lot more income, too).

Retirement Investing: Most People Go Wrong at Step 1

When it comes to retirement investing, most folks lean heavily on dividend-paying S&P 500 stocks, particularly those with above-average dividend yields. And if you don’t want to manage a blue-chip stock portfolio on your own, no problem: Wall Street has you covered with the many ETFs it offers.

But this is the wrong route for a number of reasons—the main one being lame dividends!… Read more

Read More

What are we dividend investors to expect in 2021? Let’s look to Washington, DC, where the switch on Jay Powell’s printing press is stuck in “high”:

Money Supply Surges—With No End in Sight

With Powell’s fiat money keeping (what’s left of) the Main Street economy afloat, you can bet that his “instant” cash will keep rolling in. He’ll have a willing partner in incoming Treasury Secretary Janet Yellen, who followed the same strategy when she was Fed chair:

New Boss Same as the Old Boss

This is a recipe for inflation once the economy gets back on its feet. Back in September, we discussed some stocks that make solid inflation hedges by hiking their dividends faster than prices (and inevitably, interest rates) rise.… Read more

Read More

Here at Contrarian Outlook, our beat is income, and we’re often asked for analysis on high-yield ETFs. Today, we’ll look at three funds paying up to 11% (yes, that’s no typo).

I appreciate the ETF popularity. They’re cheap. They’re tax-efficient. They’re  well-marketed. They’ve got cutesy tickers.

But income investors who blindly buy into the hype, unfortunately, are not getting the most dividend for their dollar.

The real dividend deals are found in ETFs’ lesser-known cousins, closed-end funds (CEFs), which often dish even bigger payouts (and a monthly cadence, to boot). CEFs can also trade at discounts to their net asset values, because they fly under Wall Street’s radar.… Read more

Read More

Tech has taken a punch in the face this past few weeks—prompting many readers to wonder if it’s time to sell after booking some big gains in the sector this year.

No way. We’re dividend investors first and contrarians second, so we’re going to take the other side of that bet and buy this tech “mini-dip.” We’ll do it with closed-end funds (CEFs) yielding 7% (and more) that also give us a unique “double discount” to hedge any downside we might see in the coming months (this is 2020, after all) and a good shot at outperforming tech and the broader market, too.… Read more

Read More

Categories