A Stunning “Rinse and Repeat” Play for 40%+ Returns (Again and Again)

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With stocks grinding along near all-time highs, decent discounts (and decent dividend yields!) are thin on the ground. But if we look close enough, they are there.

The answer to this no-yield problem is simply going one step beyond the blue chips everyone buys. Our big dividends (at discounts) are lying there in a corner of the market that few serious investors pay attention to. That’s too bad for them, but great for contrarians like us.

I’m talking about closed-end funds (CEFs), which, as a group, yield around 7% on average as I write this.

And here’s the truly underappreciated thing about these high-paying funds: many of them own the big names of the S&P 500 anyway!… Read more

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Nick Patterson was one smart dude. Math genius, stats wiz and perhaps the top code breaker for the British government for many years.

But even he couldn’t figure out how his new employer was minting so much money.

Patterson joined up with hedge fund manager Jim Simons and his “math dream team” in 1993. Simons was a renowned mathematician who plucked top academic talent from leading universities in setting up one of the world’s first major “quant” funds.

“Quant” is of course slang for “quantitative.” These guys developed math models and built computer programs that profited from clues delivered by price action alone.… Read more

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The market isn’t doing fixed-income investors any favors right now. But one of my favorite funds—in one of the best cash flow niches in the market—is delivering a gaudy 6.6% yield at today’s prices.

And it does that by holding some of Wall Street’s most boring, stable and dependable securities.

How can we bank this 6.6% “free lunch” when 10-year Treasuries still pay less than 2%? By tapping into an income stream that most individual investors rarely think about: Preferreds.

The Power of Preferreds

If we wanted to own a piece of a company, say JPMorgan Chase (JPM), we’d go out and buy a few shares of JPM.… Read more

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This GameStop madness is a clear and present danger to our dividends.

Let’s stop and look at exactly what it means for our income streams, and what we’re going to buy to protect ourselves (and cash in with monthly payouts up to 8%!)

When the Dumb Money Runs, We Need to Be Careful

The whipsawing shares of GameStop (GME), AMC Entertainment Holdings and others are classic cases of “dumb money” in action: they’re among the many short squeezes breaking out across the market—where short sellers, including hedge funds, betting against a stock lose big as buyers bid the stock up in an effort to “stick it to the suits.”… Read more

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Successful dividend investing is simple, though not necessarily easy. There are nuances which trip up many investors (including most professionals!). These twists and turns create “yield alpha” opportunities for contrarian-minded income investors like us.

If everyone else in the market were perfectly grounded and calculated, there would be no chance for us to make above-average returns. Thanks to these inefficiencies, we are able to bank big yields and price gains in Dividend Land. Ready to retire on dividends? Follow these five steps and we’ll do it together. Let’s start with an obvious yet underappreciated rule for income investors.

Step 1: Count Your Dividends

Since we focus on high yield, most of our returns come from the “yield” component of stocks.… Read more

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Last week, Federal Reserve Chair Jay Powell reiterated his stance that he’s keeping rates at zero for a while. It was no surprise, but it confirms that we’ll continue to ignore US Treasury bonds. They might not pay enough in our lifetimes to warrant our attention ever again!

Instead, we’ll turn our focus to higher paying fixed income vehicles. I’m talking about corporate bonds, convertible bonds and “preferred” stock. They all dish more dividend per dollar than lame T-Bills.

But is this the best time to buy them, with an election just around the corner? It’s a common question, as I’m seeing many subscribers writing in to ask:

Brett, what dividends do we need to Buy/Hold/Sell if X/Y/Z happens in November?Read more

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Since March, central banks around the world have flooded the globe with newly printed money. As usual, we went “big” here in ‘Merica, with $3 trillion and counting flooding into everything from tech stocks to gold to bonds.

Who exactly is buying a US Treasury yielding 0.7%? Perhaps rich guys and gals with $10 million or more in the bank. Even then, these bonds are paying just $70,000 annually on that ten-mil! Which means a wealthy bond bull must tap into some capital or kiss that country club membership goodbye.

The Federal Reserve, of course, a big buyer. It’s distorting the market and keeping interest rates low, to the benefit of corporations but the chagrin of retirees.… Read more

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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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Successful dividend investing is simple, though not necessarily easy. There are nuances which trip up many investors (including most professionals!). These twists and turns create “yield alpha” opportunities for contrarian-minded income investors like us.

If everyone else in the market were perfectly grounded and calculated, there would be no chance for us to make above-average returns. Thanks to these inefficiencies, we are able to bank big yields and price gains in Dividend Land. Ready to retire on dividends? Follow these five steps and we’ll do it together. Let’s start with an obvious yet underappreciated rule for income investors.

Step 1: Count Your Dividends

Since we focus on high yield, most of our returns come from the “yield” component of stocks.… Read more

Read More

“Not for individual resale.”

Ever see that label on a box of food, and scratch your head? Like who’s buying this big-mega bag of Chips Ahoy for the purpose of reselling the “individually packaged” helpings of cookies inside?

While you and I have better things to do than deconstruct groceries, we also have better ways to make money than deconstructing perfectly good bond funds.

My article about “preferred” shares a couple of weeks ago inspired a few questions. We’ve got a few adventurous income colleagues who are interested in unwrapping the perfectly good packaging we discussed. Let’s walk them back from this potential “Chips Ahoy moment” in a moment.… Read more

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