36% Returns in 7 Months from Safe Dividends: Here’s How

Our Archive

Search completed

Start rounding up your spare cash, because the best dividend buying opportunity—since last October—is coming soon.

Last week, we chatted about stacking dry powder for a special purchasing moment. For those of you who have been piling up the payouts into a cash mountain, let’s get ready to deploy it.

Why does this matter? Well, buying moments like these can secure us several years’ worth of returns at once. Let’s revisit the October example, which Contrarian Income Report subscribers will remember fondly.

At the time, we had two months of pullback behind us. Scary headlines had driven fear to levels that should be bought, and that is exactly what we contrarians did.… Read more

Read More

This mess with Archegos Capital Management has shone a light on the use of leverage in investing. And it’s particularly relevant (in a good way!) to investors in high-yield closed-end funds (CEFs).

That’s because it:

  1. Clearly shows the difference between gambling (what Archegos was doing) and investing in smartly run, value-focused high-yield funds (what we do), and …
  2. Highlights a key misconception about leverage we can take advantage of. (We’ll look at a 5.5%-yielding fund that profits from a methodical use of leverage in a moment.)

Archegos, if you’re not familiar, is a hedge fund that had (until last week) $30 billion in positions in several stocks, including ViacomCBS (VIAC), Discovery Inc.Read more

Read More

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

Read More

I don’t know about you, but I’m ready to say farewell to this whole Reddit/GameStop (GME) situation.

But before we bid adieu to this weird market moment, we need to take just one more run around the horn, because it’s left three big benefits in its wake that no one is talking about right now.

These three hidden catalysts all point to stronger market gains in the weeks and months ahead—gains we can “convert” to 7%+ dividends when we pick up one of my favorite investments, stock-focused closed-end funds (CEFs), right now. Let’s dive in.

Reddit Gamblers’ Wins Will Go Into the Economy (and Boost Other Stocks)

The most immediate positive for the market comes from the big gains early investors in GameStop and other companies at the center of this battle enjoyed.… Read more

Read More

Markets are betting on the federal government pumping $908 billion in stimulus into the economy. If that cash wave rolls out, it’ll boost the group of funds I want to talk to you about today. They pay dividends of 6%+ and trade at big discounts to their true value now.

The Current Stimulus State of Play

First up, while the final stimulus bill is still being negotiated by Congress, it seems likely we’ll get a version similar to what’s been released already when a compromise is reached. So let’s take a look at what’s on offer.

Before we go further, I’ll say that the government’s new stimulus bill looks more effective than the CARES Act passed in the spring.… Read more

Read More

Is the 60/40 (stock/bond) portfolio now 100/0 in favor of stocks?

That’s been the subject of several financial headlines lately. The authors are suggesting that the traditional mix of 60% large-cap stocks and 40% safe bonds won’t generate enough money for us to retire on unless we’ve got a cool $10 million or so. And, they’ve got a point, with the S&P paying less than 2% and US Treasuries yielding under 1%.

But even a 100/0 portfolio won’t help you too much. Put it all in the popular SPY ETF, and we’re still under 2%! Plus, this “heart attack kid” can fluctuate by 1% or even 2% per day.… Read more

Read More

Is it time to buy the dip?

Almost. And when we do, let’s not just “buy” an index fund (or worse, a lame ETF!) and “hope” that we timed it right. No, no, we contrarian income seekers can do better.

Let’s instead choose investments that cash flow. In a moment we’ll talk about one that yields 7.4%.

And let’s not buy them at mere “face value” either. Only the unsophisticated first-level types, as our man Howard Marks calls these marks, pay full price! We can, and should, demand discounts in addition to the pullback.

The major indices have officially “corrected” from their September highs (which is typically defined as a 10% decline).… Read more

Read More

Let’s be honest: there are a ton of ways to collect passive income out there. But there’s only one that’s easy to get into (no matter how much money you have!), generates yearly cash payouts of 8% or more and is used by billionaire investment gurus on the regular.

I’m talking about an often-overlooked investment called a closed end fund (CEF). And today I want to show you how to invest in CEFs in just three simple steps.

CEFs are like mutual funds or ETFs in that they pool together money from investors, which the fund’s managers then use to buy a basket of stocks, bonds, real estate investment trusts (REITs) or other investments, depending on the CEF’s mandate.… Read more

Read More

If you’re shopping for high-yield closed-end funds (CEFs), two numbers are critical:

  • The dividend: There are about 500 CEFs out there, and they boast huge payouts of 7% on average. Many also pay monthly.
  • The discount: Due to a quirk in the CEF structure, these funds often trade at discounts to the per-share value of their portfolios. Called the discount to net asset value (NAV), this indicator is the clearest indicator of imminent price gains I’ve ever seen in an investment.

A Proven Gain Predictor

Thanks to the discount to NAV—which is available on any fund screener—you literally have a CEF’s market price on a string!Read more

Read More

The S&P 500 index has been “relief rallying” like crazy, but to most income investors, this means nothing. The wider the basket of stocks, the rougher the year it has been. Let’s consider that (as I’m writing this):

  • Year to date, the “big cap focused” S&P 500 is down “just” 12%. However,
  • When we weight its 500 stocks equally, its return drops to 20% YTD. And,
  • When we expand the universe to look at small cap stocks, we see the Russell 2000 is down a brutal 24% thus far in 2020:

Don’t Let the S&P 500 Fool You

Plus, we now face another problem: an income drought!… Read more

Read More

Categories