These 8% Dividends Are Due for a “Delayed Reaction” Surge

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There’s no sugarcoating it: As I write this, our favorite high-yielding income plays—closed-end funds (CEFs)—are lagging behind “regular” stocks.

But that doesn’t mean I’m opening this article on a sour note. Truth is, this underperformance is good news for us, as these unloved (and cheap!) 8%-payers are long overdue for a “snap back” to normal.

The result is a (likely short-lived) buying opportunity we’re going to break down now—especially as it relates to the 6.7%-paying Adams Diversified Equity Fund (ADX), a core holding (and buy recommendation) of my CEF Insider service.

But let’s start with that performance lag.

CEFs Get Caught in Stocks’ Wake

Source: CEF Insider

Over the last year, CEFs focusing on stocks (measured by the performance of our proprietary CEF Insider Equity Sub-Index) have returned 8.9% as of this writing, well below the stock market’s 28.5%.… Read more

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I know that no one wants to talk about the 2020/2021 lockdowns anymore. But those dark days did do one critical thing for the high-yield corporate-bond market: made these so-called “junk bonds” too big to fail.

And investors are just starting to come around to that fact.

The takeaway is that we’ve got a nice opportunity to grab historically large, and stable, dividends from corporate-bond funds, including a closed-end fund (CEF) we’re going to focus on in this article: the PIMCO Dynamic Income Fund (PDI).

Long-time readers of my articles here on Contrarian Outlook, as well as my CEF Insider advisory, will recognize PDI.… Read more

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Be careful how you buy your bonds. The most popular tickers have four “fatal flaws” that’ll doom you to underperformance at best, or at worst leave you hanging in the event of a market meltdown!

Let’s pick on the widely followed and owned iShares iBoxx High Yield Corporate Bond ETF (HYG) as an example. It has attracted nearly $17 billion in assets because:

  1. It’s convenient and as easy to buy as a stock.
  2. It’s diversified (for better or worse, as we’ll see shortly) with 1,188 individual holdings.
  3. It pays well, at 6% today.

The accessibility of funds like HYG appears cute and comfortable enough.… Read more

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Today we’re going to build ourselves an outsized income stream with just three funds. Buy all of them and you’ll end up with an average yield of 8%+, with payouts rolling your way every month.

Investing doesn’t get much simpler than that!

You’ll also get strong diversification: The three funds we’re about to uncover hold stocks, bonds and real estate. Combined, give you exposure to thousands of assets across the country.

Maximizing Your Savings Potential

Before we go further, let’s put an 8% payout in perspective: If you have $1 million saved, it translates to $80,000 annually, or over $6,600 per month—a substantial amount that could either supplement or even replace your current income.… Read more

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We’ve got clear proof that our favorite income funds—closed-end funds (CEFs), which yield 8% and up—are still well behind the rise we’ve seen in the S&P 500, and set to make up that ground.

While I can’t tell you exactly when that bounce will happen, we’re going to dive into the reasons why it’s very likely today. And, anyway, timing doesn’t matter too much to us at CEF Insider because we’re happy to use this time to buy our portfolio’s high dividends, which yield up to 13.7% as I write this.

The “Scared Retail Investor Lag Effect” and Our CEFs

Sadly “SRILE” doesn’t sound too appealing as an acronym, so I don’t think I’ll become famous for inventing it.… Read more

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Imagine a fund yielding 16.2% that’s likely to keep that high payout steady for years and years. I know it sounds unthinkable, yet we have just such a fund sitting in front of us today—ripe for buying at a discount, no less.

That would be the PIMCO Dynamic Income Fund (PDI), a bond fund throwing off that 16.2% payout, as of this writing. PDI uses a variety of credit investments to produce that outsized income stream. Thanks to high interest rates that look set to stay high for some time, and thanks to a sudden drop in the fund’s valuation, that income stream is sustainable.… Read more

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Too many folks are letting so-called “safe” yields on Treasuries distract them from the real action these days: 10 “stealth” bond plays yielding way more—I’m talking 9%+ payouts here—that Jay Powell just put on sale.

These deals won’t last: As the Fed pauses rate hikes, bond yields will roll over, driving up prices—and our chance will be gone.

These 10 Bond Deals (Yielding 9%+) Crush Treasuries

These 10 picks, which we’ll get into below, are bond-focused closed-end funds (CEFs), and they’re miles ahead of 2-year Treasuries on every count.

Dividends? These funds yield twice (and more) the 4.7% that 2-year Treasuries pay.… Read more

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Bill Gross is one of the great characters in the investment world: flamboyant, bold—and generally disliked by those who worked for him.

But his PIMCO Total Return Fund saw over 9% annualized returns in its first decade, despite being a supposedly “boring” bond fund.

Those gains made Gross one of the most powerful people on Wall Street—so much so that during the subprime mortgage crisis of 2007 to 2009, the government called on PIMCO to help take care of the toxic assets that had sparked the worst recession in a century.

PIMCO’s Contrarian Subprime Play Paid Off Big

Gross, for his part, did help, thereby helping investors earn even more money.… Read more

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A few weeks back, bond giant PIMCO trimmed a bunch of payouts from its closed-end funds (CEFs). Which was no bueno for income investors, who buy CEFs solely for their dividends.

We don’t own any PIMCO funds in our premium portfolios currently. But readers, who rightfully recognize me as a PIMCO fanboy, have written in to ask what’s up.

“Any thoughts on PIMCO recent slashing of dividends? Do you think they will also cut PDI’s dividend?”John S 

John, you know me well. Maybe too well! Here’s a live look at my nightstand which boasts a copy of The Bond King: How One Man Made a Market, Built an Empire, and Lost It All.… Read more

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Today we’re going to build ourselves a portfolio that hands us a 10.5% yield. And we’re going to do it with just three funds.

The appeal of a 10.5% payout is tough to deny: when you’re getting that much of your investment back every year in dividends, you’ll recoup the whole thing in less than 10 years. Everything else is gravy!

What’s more, two of the three funds below—all of which are closed-end funds (CEFs)—pay dividends monthly, so we’re getting our payouts in line with our bills. That’s unheard-of in the world of vanilla stocks. Almost all of them make us wait three long months for our next payout.… Read more

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