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

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“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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Let’s shrug off today’s “dividend desert” and do something most folks think is impossible—ridiculous, even. We’re going to replace our monthly salary with a huge income stream from a group of closed-end funds (CEFs) that yield 7% or more (sometimes a lot more!).

The math here is simple: at a 7% dividend, you’ll have just shy of $3,000 ($2,917, to be precise) flowing into your account every month on a $500K investment. And yes, these dividends do flow your way monthly, right in line with your bills.

These CEFs have been paying these dividends for years, in some cases decades. And there are plenty of them, too: my CEF Insider service tracks 117 CEFs yielding over 7% and paying out every month.… Read more

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It’s mid-2021, and stock prices are up, dividend yields are down, and you’re probably wondering what the heck to buy for a decent income stream as we thunder toward 2022.

It’s a head-snapping reversal from where we were a year ago, which makes now the perfect time to step back and plot our next dividend moves.

So let’s piece together our game plan for the rest of the year—and into 2022—by ranking five popular (and not so popular!) investments known for income from worst to first. You’ll find many individual tickers to put on your list here, too—including one yielding a healthy 6.8% today.… Read more

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Most people don’t realize this, but there’s a simple, two-step way to grab serious gains in high-yield closed-end funds (CEFs).

I call it the Index Boomerang Effect. And when I say it’s simple, I’m not kidding around.

It goes like this: over time, we can expect a CEF in a particular asset class to perform around as well as the index that represents it (though to be honest, the best CEFs tend to beat their indexes handily, which makes our strategy even more powerful).

But even the best CEFs do lag their indexes from time to time. The key is to spot those times and buy—then ride your CEF to strong gains as the index “pulls” its share price higher.… Read more

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Three of the most successful closed-end funds (CEFs) in history have done something unprecedented—both for the funds themselves and the company that manages them. They merged.

PIMCO is arguably the most successful CEF manager around, and investors know it: they’ve bid up almost all the company’s funds to premiums to net asset value, or NAV (in other words, their market prices are higher than the per-share value of their portfolios). 

The company has always kept its funds separate, even though they have many similarities, so it came as a surprise when it announced that its PIMCO Dynamic Credit and Mortgage Fund (PCI), PIMCO Dynamic Income Fund (PDI) and PIMCO Income Opportunities Fund (PKO) would be merged into the same fund.Read more

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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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One group of funds is doing something very unusual right now: they’re raising their dividends by double digits! And those huge hikes have driven the yields on some of these unsung income plays well above 7%.

Today we’re going to jump on this red-hot contrarian opportunity.

These smartly run dividend payers (and growers!) are closed-end funds (CEFs) that hold floating-rate loans. These assets are often overlooked, which is too bad, because they’re corporate bonds that do the opposite of what most bonds do. That makes them perfect buys for upside in today’s market, when “regular” corporate bonds’ prices are plunging.

Let me explain how floating-rate loans work, and how we’ll squeeze them for strong gains and growing 7%+ dividends.… Read more

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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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If you’re like most people these days, you’re desperately searching for any kind of meaningful dividend stream.

Finding one is no easy task. The S&P 500, after all, yields 1.5%, on average. Treasuries? With their 0.9% yields, they’re not even worth talking about.

With the old income go-tos off the table, plenty of folks are looking further afield. Some are boosting their holdings of high-yield bonds through exchange-traded funds like the SPDR Bloomberg Barclays High Yield Bond ETF (JNK). Others are going with more esoteric investments, like high-yielding business development companies (BDCs), which you can tap through the UBS Etracs Business Development Company ETN (BDCS).Read more

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Something shocking just happened: Treasury Secretary Steven Mnuchin cut off a $454-billion program the Federal Reserve uses to keep the bond market running.

A disaster, right?

You’d think so. After all, we’ve heard time and time again that the Fed will do whatever it takes to support the bond market through the crisis. Now a big source of cash needed to do that is gone.

The bond market’s response was even more surprising: crickets.

The junk bond–tracking SPDR Bloomberg Barclays High Yield Bond ETF (JNK) and iShares National Muni Bond ETF (MUB) held on to post-election gains after Mnuchin’s decision was announced.… Read more

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