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Tomorrow’s Bond Headlines, Today, Right Here

“Get tomorrow’s Bloomberg headline, today, at Contrarian Outlook!”

Our new slogan for 2023? Perhaps. I bring it up because our bond recession trade has already gained steam into an outright bandwagon.

Just three weeks ago, we contrarians shouted alone in the dividend woods. “Buy these safe bonds paying 4.2% before a 2023 recession!”

Our logic was simple. The 10-year Treasury bond hadn’t paid 4% or more in 14 years. With stocks looking shaky (to say the least!), the 4-handle coupon was attracting some whale buyers, including our man the “bond god” Jeffrey Gundlach (more on him in a moment).… Read more

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Name a Bond Fund: It’s Probably Down. Here’s Why.

If you own a bond fund, it’s probably down in recent months. Let’s talk about why and walk through three popular fixed-income ideas from worst to first.

We’ll start with the iShares 20+ Year Treasury Bond ETF (TLT). TLT is the knee-jerk investment that many “first-level” investors buy when they are looking for bond exposure. Unfortunately, there are two big problems with TLT:

  1. It only yields 2.1%.
  2. Worse yet, its 19-year duration is drubbing its total returns.

Any kid knows that 19 years is “way too long” to hold a bond when inflation is running a hot 7.5%. (Please, somebody get these TLT investors a Contrarian Income Report subscription!)… Read more

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Sell These 4% Bonds by 2022 (Buy These 8% Bonds Instead!)

“Junk” bonds have never paid so little. Which makes them pointless. We’re here for the yields, not the credit quality!

Fortunately we can improve our dividends and our safety by being smarter. We are going to simply sell the popular 4%+ bonds and replace them with better 8%+ yielding equivalents.

First, the dogs. Anyone who owns either of the two most popular high-yield bond ETFs is a sad income investor today. Their yields are at all-time lows. The SPDR Bloomberg Barclays High Yield Bond ETF (JNK), for example, pays only 4.3%:

JNK’s Current Yield is Junk

And it gets worse, because this trailing yield looks better than the year ahead.… Read more

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How to Retire on $77,000 in Yearly Dividend Income

A recent research paper from Morningstar concludes that retirees should only withdraw 3.3% of their money annually. In other words, a million-dollar portfolio should only be relied on for $33,000 in annual income.

That is a sad ending for a seven-figure nest egg!

Scary, too. This $33,000 salary isn’t delivered in cash flow. No, this is a “withdrawal rate”—which means the retiree is tapping principal. Which means the retiree is buying stocks and hoping they’ll go up.

But “hope” is not a strategy. The volatile weeks we’ve seen recently have no doubt forced some terrified retirement investors into selling low.

This is “reverse dollar cost” averaging, unfortunately.… Read more

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3 Dividend Stocks to Play the Taper (for Fast 61%+ Gains)

Goldman Sachs says the Fed will start cutting its bond purchases next month—and that sets up some of our favorite dividend-payers for a quick 61% profit surge. (I’ll reveal the tickers we need to reap this “taper bonanza” in a moment.)

Wait. Why are we taking Goldman’s word here?

Because “Government Sachs” has the deepest DC connections of any bank: former Treasury Secretaries Henry Paulson and Steven Mnuchin are Goldman grads, among many other government bigwigs. When it comes to what’s happening at the Fed, I’d take Goldman’s opinion over that of Jay Powell himself!

A Boon for Dividend Investors

To get at how we’ll flip the taper into big dividends, let’s connect it to a figure we all watch closely: the yield on the 10-year Treasury note.… Read more

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5% Decline? No Problem With This Dividend Strategy

The stock market goes up as well as down and, for whatever reason, it tends to swing wildly in September and October. With last Monday’s intraday price action, we saw our first 5% decline in a year.

The last time the S&P 500 fell by 5% or more was… this time last year.

Losing money isn’t fun. Then again, it is our job to make sure that paper losses stay on the page.

Historically speaking, this is a good month to go shopping. Last October, we locked in 7.3% to 10% dividends—and 51% total returns (in just 12 months!) soon followed.… Read more

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How to Bank $49,500 in Dividends on Way Less Than $1 Million

Mainstream investors are stuck with cheesy dividend ETFs paying measly sub-3% yields. But we contrarians can grab ourselves a lot more dividend cash with a “switch” in our portfolio that more than doubles our yield, to 6.6%!

We’ll be fully diversified, too, with bonds, S&P 500 stocks and real estate populating our holdings—703 investments in all. And they’re all hand-picked by expert money managers who evaluate credit and interest rate risk for us.

Plus, this “6.6% retirement solution” has more price upside! The 3 battleship funds we’ll get into below are geared to grind higher as they pay their dividends, no matter what the market does.… Read more

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Better Than a Mattress? These Bond Funds, I’m Not So Sure

The market looks like it’s about to fall apart. Which means we contrarians will step in, and smartly bank more dividend for our dollar.

Some of us park our dry powder in cash. Others stash in conservative bond funds to juice a bit more yield out of our savings. Let’s talk about these bonds because this is an ideal time to say goodbye to them (for a while!)

As dividend investors, we are naturally allergic to cash. After all, why leave money in dollars earning nothing when we can move it to a stock or fund yielding something?

As I write our Contrarian Income Report portfolio yields 6.3%.… Read more

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5 Dividends Paying Up to 8% (Ranked Worst to First)

Fact: there are still lots of big, cheap and safe dividends out there—but they’re going fast as this market floats higher.

So today we’re going to get right to it and look at four options for your portfolio now, ranked from worst to first.

“Worst to First” Income Play No. 4: 10-Year Treasuries

The 10-year Treasury offers a “safety feature” mainstream investors love: no matter what happens, you’ll get your principal back after 10 years.

That’s actually a trap, though, because inflation gnaws at your nest egg the whole time, and your yield—1.6% today—won’t help you: it’s 40% below the rate of inflation, which jumped 2.6% year over year in March!… Read more

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The Best CEFs for Rising Interest Rates

Thank you to our 1,578 Contrarian Income Report subscribers who attended our Q1 webcast last week! We received 114 questions during our one-hour call, plus several dozen more beforehand. Amazing.

Thank you for the thoughtful questions. I’ve read each and every one. Let’s chat about popular closed-end fund (CEF) topics today. (Next week, we’ll circle back with your equity-focused dividend questions.)

Q: Brett, what are your thoughts about Calamos Convertible Funds (such as CCD, CHI and CHY), which are currently yielding about 8%? Thank you.

Convertible bonds are a big beneficiary of Jay Powell’s money printing activity. Convertibles pay regular interest.… Read more

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