Sayonara, SPY. And Hello, Recession-Resistant Monthly Divvies.

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Sayonara, SPY. And Hello, Recession-Resistant Monthly Divvies.

Well the “index huggers” hurled their positions quickly, didn’t they! Some bad jobs numbers. A rally in the Japanese yen. And it was sayonara, SPY.

The financial “squares” use blunt instruments. When they panic, they dump the only ETF they own. Turns out they were all short the Japanese yen heading into the weekend!

When the margin call came, they sold the only ticker they own: SPDR S&P 500 ETF Trust (SPY).

I warned you about SPY three weeks ago, just before it crashed. My problem with SPY came down to three stocks, Apple (AAPL), Nvidia (NVDA) and Microsoft (MSFT), which made up 21% of the index—and still do!… Read more

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These 7%+ Dividends Are Your Best Play as Rates Get Slashed

Look, rate cuts are only weeks away now—likely starting in September. And there’s one terrific way to tap them: high-yielding municipal bonds!

I know most folks think “munis”—issued by state and local governments to fund infrastructure projects—are boring.

It is, frankly, a ridiculous opinion. Tell me what’s “boring” about an investment that kicks out a 7.7% tax-free dividend!

To be sure, there are a couple quibbles you might have with munis.

For one, they’re tough to buy individually. But that’s really not a problem: ETFs offer one way in, but a much better way—and the only road to 7.7%+ dividends—is through closed-end funds (CEFs) like the three we’ll break down in just a second.… Read more

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These Tax-Free 7.7% Dividends Just Grew 30%+ Overnight

Some of our favorite high-yield dividends just did something stunning: They sent their investors’ payouts soaring—in some cases by more than 30% overnight.

All of these high-paying dividend growers are municipal bond funds, a corner of the market many folks see as boring—if they know about it at all.

I don’t know what’s “boring” about a payout that leaps double-digits in one go—and hands us a 7%+ tax-free dividend, to boot!

That’s exactly what’s happened at a slew of “muni” focused closed-end funds (CEFs) in the last month or so. (Municipal bonds are issued by state and local governments to fund infrastructure projects).… Read more

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Is There Any Reason to Hold a CEF Paying Less Than 5%?

Only here at Contrarian Outlook can we banter for an hour-plus about closed-end funds, utilities and oil dividends! This site is our sanctuary, my income friends.

I’m talking about our Contrarian Outlook 2024 Q2 VIP Webcast. Every quarter we fire up GoToWebinar and discuss the top high-yield stocks and bonds on my mind, along with your questions. A big thanks to my 1,151 subscriber friends who attended the meeting live.

On the call I fielded some questions about closed-end funds (CEFs) that we didn’t have time to cover. I said I’d read them all and, well, I did. So, let’s address them now.… Read more

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“Sell in May”? Nah, We’re Buying These Cheap Bond Dividends Instead

This market rally could roll right through the summer (so much for “Sell in May and go away!”), and we’ve got two sweet bond buys to play it.

That’s right, I said bonds because there are more bargains in bond land than in stocks right now. While stocks could keep floating higher, the last thing we want to do is chase this rally.

Instead, we’re going to ride along on the stock side of things. In bonds, though, the state of play is a bit different.

We’re going to list our two bond picks in order of appeal shortly, capping this article off with our top selection—an unsung closed-end fund (CEF) trading for 12% below its “true” value and yielding a stout (and tax-free) 5.8%.… Read more

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My Advice: Buy This 4.6% Tax-Free Dividend as Powell Hits Pause

There’s a crop of outsized dividends out there that are absurdly underpriced—I’m talking 14%-off discounts here. And our opportunity to pounce has arrived.

I’m talking about municipal bonds, which, like corporate bonds, look set to bounce as the economy slows and interest rates top out—then start to move lower. As rates ease off, bond yields will dip, putting a lift under bond prices (as yields and prices move in opposite directions).

The upshot? AI-powered NASDAQ stocks will lose their luster, and bonds and bond proxies—including utilities and “munis”—will likely be the darlings of 2024.

Heck, even a modest decline in rates would be enough to boost these assets.… Read more

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The Best Muni Bonds for 2023 Trade at 14% Discounts

As we head towards the most telegraphed recession in recent memory, US Treasuries are receiving a lot of attention. And rightfully so.

In recessions, interest rates go down. This boosts bond prices (which trade opposite rates).

But not all bonds are created equal—especially during recessions. Slowdowns tend to make the safest bonds the most attractive.

After all, it can be a slippery slope from slowdown to meltdown, so many investors prefer the safety of Treasuries. In 2008, for example, the S&P 500 sank 38% but US Treasuries rallied sharply. The iShares 20+ Year Treasury Bond ETF (TLT) delivered a 28% gain for the year:

In 2008, T-Bonds Did Great 

I don’t think we’re in for a repeat of ’08, but this “buy Treasuries before a recession” trade has worked superbly since we called it in November.… Read more

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New: 2 Steps for 9.9% Dividends in This Bubbly Market

Need more proof this market is completely upside down? Look no further than this mess with Hertz Global Holdings (HTZ).

You likely know the story: the car-rental chain, run off the road by the coronavirus, filed for bankruptcy over the Memorial Day weekend. On the first trading day afterward, May 26, the stock fell to $0.56 … then soared 10X!

Investors Compete to See Who Can Lose the Most

It’s pulled back a bit since, but is still up 200% from where it stood right after its bankruptcy filing.

And get this: 159,000 of users of the popular Robinhood trading app owned Hertz as of June 19, according to Robintrack.… Read more

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These 146 Funds Have Never Lost Money (and could pay you 8.3%)

What if I told you there was a corner of the market where every single fund has turned a profit? And these amazing investments paid out a huge income stream that was entirely tax-free?

The kicker: many of these funds—including one throwing off a 4.6% dividend now (that could be worth 7% or more to you, depending on your tax bracket)—are trading at discounts to their “true” value now. I’ll name this low-risk income (and growth) play shortly.

146 Funds, 0 Losers

This story starts with municipal bonds, which are issued by cities, counties and states to fund buildings, roads and hospitals.… Read more

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10 Steady Tax-Equivalent Yields Up to 10%

Municipal bonds are off to a slow start in 2018 – which is usually a bullish sign for these tax-free payers.

We last “pounded the table” on munis in December 2016. They were coming off their worst month since the Great Recession, and we discussed their tendency to rally when they are hated:

“It’s impossible to call a top in yields (or bottom in munis) without the benefit of hindsight. But we contrarians make our money buying when nobody else wants to – and the last time munis were this hated, they returned 30-38% over the next 12 months.”

Turns out that was the bottom in munis.…
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