Will Stocks Drop Again? Here’s My Take (and an 8.5% Dividend to Profit)

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Will Stocks Drop Again? Here’s My Take (and an 8.5% Dividend to Profit)

Volatility is back! And we contrarians know what to do: Get ready to buy.

And we don’t have to try to time the depths of the next selloff, either, because the three 7%+ paying, “volatility-loving” dividends we’re going to talk about are perfect for this market.

They’re all closed-end funds (CEFs) that see their cash streams grow when markets get skittish. Their secret? They sell covered-call options on their portfolios.

This is a smart, low-risk way they can generate extra income—and send it our way as 7%+ dividends. That’s because these funds charge investors a “premium” for the “option” to buy their holdings at a fixed time and date in the future.… Read more

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Will Stocks Drop Again? Here’s My Take (and an 8.5% Dividend to Profit)

Volatility is back! And we contrarians know what to do: Get ready to buy.

And we don’t have to try to time the depths of the next selloff, either, because the three 7%+ paying, “volatility-loving” dividends we’re going to talk about are perfect for this market.

They’re all closed-end funds (CEFs) that see their cash streams grow when markets get skittish. Their secret? They sell covered-call options on their portfolios.

This is a smart, low-risk way they can generate extra income—and send it our way as 7%+ dividends. That’s because these funds charge investors a “premium” for the “option” to buy their holdings at a fixed time and date in the future.… Read more

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Will Trump Fire Powell? How to Protect Yourself With a Cheap 8.4% Dividend

Fire Powell? Keep him around? The question never seems to go away—and the markets, fueled by the so-called “TACO” trade (“Trump always chickens out,” as the acronym goes), are shrugging it all off.

But what if Trump calls Wall Street’s bluff? Luckily, there are not one but three ways for us to hedge ourselves from the “TACO trade” going cold. Below, we’ll look at all three and I’ll name my favorite of this trio. Plus we’ll grab ourselves tidy dividends of 7%+, too.

Powell Has Been On His Way Out (or Not!) for Months

If you’re experiencing déjà vu, it’s because this same story happened back in April, and it sent stocks plunging back then.… Read more

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The Last Cheap Dividend Stocks Yield Up to 9.7%

The last bargains on the big board? Discounted closed-end funds (CEFs).

CEFs are often the “last stop” for dividend deals. We are talking about an inefficient corner of the income universe, which is just great for us contrarians—we love the discounts.

And these funds can trade for less than “fair value” for months and even years on end. When the markets washed out in April, these CEFs were discarded by their vanilla dividend owners. Let’s pick up the pieces for up to 12% off, or 88 cents on the dollar. And in the process secure yields up to 9.7%.

Nuveen Dow 30 Dynamic Overwrite Fund (DIAX)

Distribution Rate: 8.4%

We’ll start with the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX), an example of a strategy that thrives in CEF land: covered calls.… Read more

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CEF Deep Dive: The One “Profit Indicator” Everyone Gets Wrong

The other day, we broke down how return of capital (ROC) can be both good and bad for investors in 8%+ yielding closed-end funds (CEFs). But in the case of high-quality CEFs, ROC is, contrary to what most people think, a good thing.

Today we’re going to look at some real-world examples to explain how, in fact, return of capital can make up a large share of a fund’s returns.

To do so, we’re going to go into five Nuveen funds, the Nuveen S&P 500 Buy-Write Income Fund (BXMX), Nuveen Dow 30 Dynamic Overwrite Fund (DIAX), Nuveen S&P 500 Dynamic Overwrite Fund (SPXX), Nuveen NASDAQ 100 Dynamic Overwrite Fund (QQQX) and Nuveen Core Equity Alpha Fund (JCE).… Read more

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“Soft Landing” Ahead? I Think So. Here Are the 6.8%+ Dividends to Buy

One of the most difficult things for me in 2022 was that, with all the doom and gloom in the air, I heard about a lot of people giving up on the dream of financial independence.

The worst part was that they were doing so at exactly the wrong time—right when the market decline had driven the yields on our favorite closed-end funds (CEFs) way up. Even now, after the S&P 500 has posted roughly 15% gains in 2023, as of this writing, plenty of CEFs yield 10%+, including nine in the portfolio of our CEF Insider service.

Worse, these folks were doing it because they’d bought into the media’s false narrative that a recession was looming, a trap I regularly warned about falling into here on Contrarian Outlook and in the pages of CEF Insider.… Read more

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Inflation, Recession or Soft Landing? This 7.8% Dividend Doesn’t Care

Inflation is falling—but is a recession next, or will we get that vaunted “soft landing” Jay Powell keeps talking about? Wouldn’t it be great if there was a dividend-payer built for either outcome?

Just such an income play exists—it’s called a covered-call closed-end fund (CEF). They’re smart buys now because they pay big dividends: the CEF we’ll break down today—the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX)—yields a healthy 7.8%.

That not only gives us a high income stream, but it also increases our safety, as we’re getting the vast majority of our return in safe dividend cash.

That’s one part of DIAX’s appeal—especially if a recession is headed our way (more on that shortly).… Read more

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These 3 Ignored Funds Yield 8.1% (and Crush Stocks)

Let’s be honest: after the year we’ve just put in, we’re all exhausted. But we can’t let our guard down. Because at times like these, it’s easy to let alarmist headlines skew our buy and sell decisions.

Worse, the clamor, and almost always incorrect market predictions that dominate the news these days, can lure you away from the reliable dividend payers you need to fund your retirement.

I hate to see that happen to investors—especially when they could easily use high-yield closed-end funds (CEFs) to retire on dividends alone. I’ve got three “low-drama” CEFs that can get you there, thanks to their outsized 8.1% average yield.… Read more

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3 Bargain Funds With Huge Yields (up to 13.7%) to Consider for 2023

We’re in one of the trickiest times I’ve seen in my investing career: inflation is receding and we’re well positioned for gains next year. Yet after the year we’ve had, many folks are still hesitant to jump into the market.

Even the 12%+ dividends we’re seeing in our favorite high-yield investments, closed-end funds (CEFs) haven’t been enough to tempt many of them.

I get it.

This period reminds me of the early months of 2009, when “green shoots” were appearing in the economy and markets, but investors were still too scarred by the preceding plunge to get in. But those who did buy then—around the bottom in early March 2009—have done very well:

Buying in Times of “Investor Shell Shock” Pays Off

We’ve got a similar opportunity now.… Read more

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This “ETF-Beater” Portfolio Yields 9.7% (With Big Upside in ’23)

Rarely do we get a buying opportunity in high-yielding closed-end funds (CEFs) like the one we have now. Thanks to the selloff, many CEFs trade at deep discounts and pay outsized yields upwards of 9% today.

With this market rally likely still in its infancy, we still have time to act here. But we don’t want to wait long, as this bounce has already started to whittle away CEFs’ discounts.

I’ve got three perfect funds for us to target below. This trio is intriguing because, taken together, they basically mimic an S&P 500 ETF, but with two key differences:

  • They pay a 9.7% average dividend, so you’re getting more of your return in cash than you would if you bought an S&P 500 index fund (which would get you a mere 1.7% payout).

… Read more

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