3 Contrarian Picks for Trump 2.0 (Yields Up to 7.5%)

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3 Contrarian Picks for Trump 2.0 (Yields Up to 7.5%)

At times like these, I’m reminded of a quote from Howard Marks, the most successful value investor you’ve likely never heard of. (Warren Buffett is a fan.)

Marks’s monthly “Oaktree Memos” are well worth a read. And in his insightful book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor, he wrote:

“What’s clear to the broad consensus of investors is almost always wrong.”

This quote has been on my mind lately because everyone is convinced that Trump 2.0 will lead to higher inflation.

I’m sure you can see where I’m going: Higher inflation begets higher interest rates.… Read more

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This “Lonely, Uncomfortable” Stock Move Delivers Big Gains

Here’s one thing most folks get wrong about dividend cuts: They can (and often do) set up terrific buying opportunities!

I know, I know. Before our customer-service inbox lights up here at Contrarian Outlook, let me be clear that we dividend investors hate payout cuts. No one wants to see their income stream and their investment take a hit, as scorned investors toss the stock.

But buying a dividend after a cut (or even before, under the right conditions) can be a winning move. It’s a setup that reminds me of the words of Howard Marks, the most successful investor no one has ever heard of (except Warren Buffett, who is a fan).… Read more

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I SPY a Laggard: 5 Divvies Up to 9.2% to Buy Instead

Be honest. I won’t be mad, but just admit it.

You’ve got some SPY in your portfolio. So much in fact you’re probably trying to quickly change the subject from the SPDR S&P 500 ETF Trust (SPY).

I’m not mad. (I’m just disappointed—ha!) We refer to SPY as “America’s ticker for a reason.” It is everywhere.

And it’s OK. Really it is. Holding SPY has worked out this year. But we’re now at an inflection point—which is why we are having this conversation.

Only three stocks account for 21% of the S&P 500. Apple (AAPL), Nvidia (NVDA) and Microsoft (MSFT) determine the entire market’s moves!… Read more

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The “Electrify Everything” Trend Is Real: These Dividends Will Win Big

The media hype machine is in overdrive, pushing utility stocks as a savvy way to play AI’s growth. You’ve no doubt seen these headlines (or some of the hundreds of others like them):

  • “The Unlikely Stocks That Became a Hot Bet on AI” –The Wall Street Journal
  • “AI Could Drive a Natural Gas Boom as Power Companies Face Surging Electricity Demand” –CNBC
  • “Utility Stocks Could Be Headed for a Decade of Strong Growth, Driven by Data, AI” –Barron’s

Before we go further, let me say right off the hop that we contrarians never chase headlines—we’re always looking to buy value first and foremost—high-yielding stocks that are washed out, in other words.… Read more

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Call a Cop! This Elite 11.8% Dividend is a Steal

Me: “Let’s find companies with lots of debt and buy them. And make a lot of money.”

You: “Wait, what?”

(Nod as always to the late, great Norm Macdonald.)

Hear me out. Last week, plain vanilla investors threw a midweek fit when Federal Reserve Chairman Jay Powell said something we contrarians assumed already: No rate cut coming in March.

The Fed decides the Fed funds rate. This often cues the two-year Treasury yield to follow. (Yes, sometimes, the two-year leads. As always in economics and relationships, it’s complicated.)

We can debate who leads who, but the key is that the Fed controls short-term rates, but the bond market determines long-term rates.… Read more

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I Bond Tourists: “Roll” Funds Into This Elite 8.2% Payer

You and I, my fellow contrarian, are old enough to remember when “I bonds”—US savings bonds designed to protect you from inflation—yielded 9.62%.

It was May 2022. Just 14 months ago!

Ah, the good ol’ days. Since then, Series I savings bond rates have tumbled to 4.3%.

Many readers wrote in with I bond questions earlier this year. The savings vehicles boasted a still sweet 6.89%. But they had two major limitations:

  • I bonds tie up our money for a year.
  • We can only invest $15,000 in them annually.

(The annual limit is $10,000 per person, plus an extra $5,000 per year if using a federal tax refund.… Read more

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Tortoise and Hare: This 5% Dividend Will Beat NVIDIA in 2024

I’m sure you probably know this—but it is usually a really bad idea to pay 43-times sales for a stock.

Note that I did not say earnings. I said sales. Revenues. The ol’ top line. Before everything.

Scott McNealy, the co-founder of Sun Microsystems, famously told investors it was insane to pay 10-times sales for Sun’s stock. Ten!

At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends.

 

That assumes I can get that by my shareholders. That assumes I have zero cost of goods… that assumes I have zero expenses… that assumes I pay no taxes… assumes zero R&D.

… Read more

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3 Disrespected Stocks Yielding Up to 5.2% (and Ready to Break Out)

It used to be that finding a decent yield in the stock market was easy.

Just seven years ago, all you had to do was buy an ETF in a sector that got income hounds’ hearts racing, like the Utilities Select SPDR ETF (XLU) and lock in an easy 4.48% payout:

The “Good Old Days” Are Over for Utility Fans

But do the same today, and you’ll get just 3.1% for your trouble, no thanks to the merciless rise in stocks (and shriveling of yields) driven by a decade of near-zero interest rates.

And sure, a 3.1% payout may still sound okay.…
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