This 10.9% Dividend Is Cheap (Even Though Stocks Have Soared)

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This 10.9% Dividend Is Cheap (Even Though Stocks Have Soared)

Think back just a couple weeks: The “yen carry trade” had investors running scared, and we had a terrific opportunity to buy stocks—better still our favorite income plays on stocks: closed-end funds (CEFs) yielding 8%+.

But wow, was that window brief! Stocks have more than recovered since, and are what I’d call highly valued, with a price-to-earnings ratio of around 27.5.

Let me be clear: I’m not saying stocks are overvalued: They’re likely to keep posting good returns because earnings are rising, and the economy is still dodging the recession we’ve been warned about for three years now.… Read more

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SEC Yield Calculation (and Why It’s Better Than TTM Yield)

“Hey Brett. How’s the weather out there in California?”

My usual reply is “warm and sunny.” Simple. Gives the asker what they expect and keeps the pleasantries moving along.

If I was one for small talk, I would be tempted to mix in a confusing and way-too-detailed response. Like this:

“The weather? Well, Sacramento hit a low of 27 degrees in the early morning hours of February 24. And we cooked at an extreme 116 degrees on September 6. It has been quite the 12 months!”

Twelve months? Who cares about 12 months? Well, bond funds do.

Last week, we highlighted the iShares 20+ Year Treasury Bond ETF (TLT): “It (TLT) boasts a 4.1% yield and has some serious upside potential.”… Read more

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2021 Midyear Report: The Best (and Worst) Dividends to Buy Now

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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These 6% Dividends Look Safe (but owning them will cost you)

Volatility has taken over, and if you’re like most folks, you’re wondering where to find the safe dividends you need to sustain your savings—and income stream—as this pandemic drags on.

There’s one intriguing alternative you may not have thought of: senior loans, also called floating-rate loans. Because they’re far up the corporate food chain, they offer a layer of safety in the event of bankruptcy, something that’s on every investor’s mind these days.

In addition, senior loans offer yields of 6%, on average, making them an income investor’s dream, too. But are these loans—which I only recommend holding through a closed-end fund (CEF)—a buy today?… Read more

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Bond Armageddon? Not for This Bargain 5.2%-Paying CEF

Subscribers to my CEF Insider service are asking me a lot about corporate bonds these days, so today we’re going to take a close look at it—and what it means for bond funds.

First, let’s talk about interest rates, which are plunging.

Debt Getting Cheaper 

This means companies pay a lower rate than ever when they issue bonds. When rates fall, it can make sense to take on more debt, because you can use that debt to raise cash. If you don’t need that cash, you can pay off the debt later at a low cost because, again, rates are so low.… Read more

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The Fed Cuts, You Gain: An 8.4% Dividend That Grows as Rates Fall

The PGIM High Yield Bond Fund (ISD) trades at a huge discount that’s going to disappear soon.

Before I explain why, let me tell you something else about this fund: it boasts a huge 8.4% dividend yield. In other words, you’d get $700 per month—or $8,400 a year—in income on every $100,000 invested. And you should consider getting in now, because ISD is set to soar.

A New Fund

For years, ISD provided a solid and reliable return, thanks to its strategy. The fund would buy corporate bonds that expired in just a couple years (or less), so there was less risk of any company going bankrupt or defaulting.… Read more

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Own Fixed Income? Avoid These 4 Fatal Flaws

Want more yield and price upside in your portfolio? You can get both from bonds – if you think a little contrarian, of course.

Just avoid the four common mistakes most bond investors make, and you’ll probably do better than most stock jockeys!

“First-level” financial advisors tell you to sell some stocks and buy more bonds as you get older. Their reasoning is that you should be trading upside for yield and security as you go.

You could actually trade all of your stocks for bonds today and retire comfortably on as little as $500,000. If you buy the right bonds.…
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The One Thing Everyone Should Know About CEFs

It’s one of the first questions readers usually ask me:

“Don’t closed-end funds’ high dividend yields make them dangerous?”

It’s a good question, with CEFs offering yields of 8% or more. It’s also a general (but far from certain, as I’ll explain shortly) rule that higher yields bring a higher risk of a dividend cut.

Take Frontier Communications (FTR), a stock my colleague Brett Owens sounded the alarm on in April.

The telecom provider was yielding a whopping 16% before it slashed its dividend in June 2017. The stock plunged when the cut was announced:

Slashed Dividend, Slashed Share Price

FTR is yielding a whopping 20% now, thanks to its collapse in price (because you calculate yield by dividing the annual dividend rate into the current share price).…
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