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

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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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Floating Rate Bonds: The Retirement Play for 2021?

My friends and I couldn’t have been more excited about our college commencement speaker. Fresh off an electrifying cameo in the 2003 comedy movie Old School, James Carville’s next act was Cornell University.

At 21 years old, we had no idea what Carville actually did for a living. (Answer: Political consultant.) And though he was an engaging and entertaining speaker, I don’t remember a single word the “Ragin’ Cajun” said. Too bad, because he has had some major wisdom to impart.

Ten years earlier, Carville made an observation that is more prescient now than ever. After watching bond investors rebuff President Clinton’s economic stimulus proposals because they demanded a higher interest rate for US Treasuries, Carville coined this gem:

“I used to think that if there was reincarnation, I wanted to come back as a president or the pope or as a .400 baseball hitter.

… Read more

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This 7.6% Yield is Paid Monthly, Trades at 96% of Fair Value

High-yield bonds have never paid less. Which is too bad, because let’s be honest—dividends are the reason we income investors wade in “junk bond” waters in the first place.

Fortunately, by being selective rather than lamestream, we can double our existing high-yield bond dividends. Nothing fancy, either. We sell the unselective ETFs and buy the ones with proven bond investors at the helm.

Before starting, let me make one huge point. It is true that almost all actively managed equity mutual funds aren’t worth the management fees investors pay. But some actively-managed bond funds most definitely are worth it.

The ETFs we would be selling are the two most popular high-yield bond ETFs.… Read more

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27% Returns After a Dividend Cut? Here’s How

When this closed-end fund (CEF) lowered its monthly dividend for the first time in 17 years, many income investors (understandably) panicked and sold.

Too bad for them. They missed out on 27% returns over the next 20 months.

Can a dividend cut actually be a good thing? Like life itself, it’s complicated—but my short answer is “yes.” Here’s when (and why).

CEFs are the exception to the “dividend cuts are bad” rule. In CEF-Land, payouts are taken from a fund’s portfolio, which is represented by a fund’s net asset value (NAV). Sure, the funds that we buy generally have income streams that are supposed to “power” NAV higher.… Read more

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