Yields 14.4%, Sure, But It’s Comically Overpriced

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Yields 14.4%, Sure, But It’s Comically Overpriced

Who is paying a 27% premium for Guggenheim Strategic Opportunity Fund (GOF)?

Don’t get me wrong. GOF is a fine fund, delivering 9.8% yearly returns on its net asset value (NAV) since inception. But we are talking nosebleed valuation territory for GOF. It’s a dangerous purchase at these levels.

Bandwagoners buying today are unlikely to see 9.8% returns. Or anything close. Plus, they are exposing themselves to 27% downside risk because, as we’ll discuss in a minute, GOF eventually finds its way back to par.

How can a premium like this exist? GOF is a closed-end fund (CEF) with a fixed pool of shares.… Read more

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This 11.1% Dividend is a Sucker’s Bet

Closed-end funds (CEFs) are ready to climb after a two-month decline. In preparation for this pop, select vanilla investors are buying this 11.1% dividend with its 14% downside.

Wait, what?!

Everyone hates bonds today. Yet, somehow, these bonds are selling for $1.14 on the dollar.

I sure wouldn’t do it. I’d favor the fixed income that everyone hates. (More on these discounted dividends in a moment.)

Who is this “I’ll pay a premium” belle of the basic income ball? Convertible bonds. Convertibles pay regular interest. In this way, they act like bonds. You buy them and “lock in” regular coupon payments.… Read more

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It’s a Bond. It’s a Stock. It’s Both (and It Pays Huge 7% Dividends)

Stocks or bonds? Why choose when:

  1. Stocks pay just 1.5%
  2. Bonds pay just 1.3%, yet
  3. There are little-known hybrid instruments yielding up to 7.9%!

These vehicles aren’t risky. They just happen to be favorites of Wall Street insiders who don’t want income investors like us crowding their favorite trades.

Unfortunately for them, we are not going to apologize for this article in advance. It’s time for us to discuss how to take the 1.5% yield from the S&P 500, the 1.3% yield from 10-year Treasuries—throw each in the trash—and instead type in the “convertible bond” tickers we’re not supposed to know about.… Read more

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6 Dividend Questions for 7%+ Yields in 2021

Thank you to our 1,581 Contrarian Income Report subscribers who attended our webcast last week! My publisher described it as a “firehose of information”—hopefully, that was a good thing!

We have you, our thoughtful reader and income investor, to thank for the inspiration behind the firehose. We fielded 45 questions before the event and another 127 on the call, for a total of 172. Amazing.

As promised, I have read each and every question (as has our excellent customer service team). In the weeks ahead, we’ll discuss as many as I can find white space for. Let’s start with six today.… Read more

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Trade-In Lame 0.5% Bonds for Secure Yields Up to 7.5%

Historically speaking, it’s best to avoid bonds when your central bank is printing money like crazy. More cash can lead to inflation, which can lead to higher interest rates—and put a damper on any fixed-rate holdings.

But not all bonds are bad ideas. Some have their coupons tick higher with rates. Others can even provide you with the upside of a stock! Let’s review US-centric fixed income, starting with the “outhouse” and working our way up to the “penthouse” quality bonds paying as much as 8% today.

US Treasuries: For 0.5%, Why?

Ten-year Treasuries pay just 0.5% or so as I write.… Read more

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A Proven “Crash-Resistant Strategy” for 7%+ Dividends, 77% Upside

I’m no mind reader, but I’m guessing you’d leap at an investment with the stability of a bond and the upside of a stock right now.

Sounds like something tailor-made for a crisis, right?

The good news is that it’s no pipe dream. These handy “crash-resistant” plays are out there and ripe for buying. We’re going to take a close look at how we can tap them for huge dividends now—yearly cash payouts all the way up to 9.7%!

It’s a retirement strategy every investor should take a look at. Unfortunately, too few even know these “shapeshifter” investments exist.

Lender Today, Shareholder Tomorrow

I’m talking about convertible bonds.… Read more

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A Country Club Investing Secret for Safety, Income and Growth

Stocks or bonds? With the market off to an inauspicious December start, you may be thinking about shuffling some money from equities into income.

But rich guys and gals know better than to choose. They blend the best of both worlds to collect interest and enjoy share price upside! And we can too.

Their secret tickers? Convertible bonds. (Before the holidays you may be tempted to add some convertibles to your portfolio simply so that you can brag about them to friends and family!)

Convertible bonds, like the preferred shares we have discussed recently, pay regular interest. In this way, they act like bonds.… Read more

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This Top “Convertible” Bond Trades for Just 87% of Book Value

Stocks or bonds? For income-focused investors, why not blend the best of both worlds to collect interest and enjoy share price upside?

This is the goal of convertible bonds, a “country club” favorite. (Before the holidays you may be tempted to add some convertibles to your portfolio simply so that you can brag about them to friends and family!)

Convertible bonds, like the preferred shares we discussed last week, pay regular interest. In this way, they act like bonds. You buy them and “lock in” regular coupon payments.

But convertibles are also like stock options in that they can be “converted” from a bond to a share of stock by the holder.… Read more

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