This “Small” 7.2% Dividend Is an Oasis of Cheap in a Pricey Market

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This “Small” 7.2% Dividend Is an Oasis of Cheap in a Pricey Market

Large cap stocks have been crushing small caps in the last few years. That’s, well, unusual, to say the least. And it’s set us up for cheap 7.2% dividends (with upside).

Small Caps Take a Detour

Small caps, of course, aren’t known for big dividends. The benchmark ETF for them, the iShares Russell 2000 ETF (IWM)—in orange above—only pays 1.1%. But stick with me for a moment and I’ll show you how we’re going to pull this off.

Mega-Caps Steal the Spotlight, Setting Up Small-Cap Bargains

Around the time of the pandemic, small caps started lagging the S&P 500 after years of tracking it.… Read more

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Interest Rates Drop, Small Caps Rise: Is It Time to Buy This 7.3% Yielder?

Normally when interest rates fall, we closed-end fund (CEF) investors are tempted to pick up a fund like the 7.3%-paying Royce Small-Cap Trust (RVT).

It seems like a particularly savvy move today, with this small cap–focused CEF trading at a 10.3% discount to net asset value (NAV, or the value of its underlying portfolio). Cheap!

But is that really a good value, or could RVT get cheaper still?

Let’s take a look, starting with small caps generally. Like large caps, they benefit as lower rates boost consumer spending. But there are two other factors that make falling-rate periods particularly advantageous for smaller firms:

  1. They mean lower borrowing costs for investors, allowing them to invest on margin more than they would otherwise.

… Read more

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This “Antique” Advice Could Cost You 7% Dividends, Millions in Gains

When I see people touting the 60/40 portfolio, I kind of feel like Haley Joel Osment’s character in the Sixth Sense. But instead of seeing dead people, I see dead ideas.

You likely know what I’m talking about: a portfolio that seeks to automatically balance risk by holding 60% in stocks and 40% in bonds.

It sounds sensible enough, but history shows that people who invest by this rule have been leaving a lot of money on the table for a long time:

60/40 Portfolio Pays Too High a Price for Low Volatility

One quick glance at US stocks, seen above in purple through the Vanguard Total Stock Market ETF (VTI), and bonds, in orange through the Vanguard Total Bond Market ETF (BND), over the last decade shows a problem.… Read more

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Tiny Stocks, Tremendous Yields: 5 Small Caps Yielding up to 13.8%

Small-cap stocks are on sale. We can buy select names for just 8.8 times earnings and 83% of book value.

Large cap stocks rarely sell this cheap. That is the problem with popularity! Which is why we’re looking small but thinking big, eyeing payouts between 7.3% and 13.8%.

(Those dividends are no typos. The beauty of being nimble individual investors means we can fish in these small but potentially lucrative ponds.)

Now small cap stocks aren’t always this cheap. Traditionally, smaller firms trade at a premium to their large-cap counterparts given their outsized upside potential. But today, small caps are less expensive by just about every valuation measure.… Read more

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How to Buy Yields up to 12% for Pennies on the Dollar

As contrarians, we search for income stocks that vanilla investors hate. Today there are not many dividend deals left. No surprise, with the market levitating since last October.

But! When we expand our search to CEFland, we do find a few closed-end funds (CEFs) left at the bottom of the bargain bin. Today we’ll discuss five that pay between 5.7% and 11.7% and trade at discounts between 12% and 18%.

In other words, these five CEFs trade for 82 to 88 cents on the dollar. Let’s explore whether each dividend is “cheap for a reason.”

General American Investors (GAM)
Distribution Rate: 5.7%
Discount to NAV: 18.4%

General American Investors (GAM) is a straightforward large-cap CEF that holds “companies with above-average growth potential.”… Read more

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This Old-Timey Stock Ploy Is Dead (Try This “1-Click” Dividend Plan Instead)

If you’ve been investing long enough, you’ve no doubt run across the 60/40 portfolio. Maybe you’ve used this approach yourself. Or maybe your financial advisor told you about it (it’s an advisor favorite!).

As the name suggests, the 60/40 portfolio is simply a portfolio that seeks to automatically balance risk by holding 60% in stocks and 40% in bonds.

It sounds sensible enough, but history shows that people who invest by this rule have been leaving a lot of money on the table for a long time:

60/40 Portfolio Pays Too High a Price for Low Volatility

One quick glance at US stocks, seen here in purple through the Vanguard Total Stock Market ETF (VTI), and bonds, in orange through the Vanguard Total Bond Market ETF (BND), shows a problem.… Read more

Read More

This Lame Stock Advice Could Cost You 8% Dividends (and Millions in Gains)

When I see people touting the 60/40 portfolio, I kind of feel like Haley Joel Osment’s character in the Sixth Sense. But instead of seeing dead people, I see dead ideas.

You likely know what I’m talking about: a portfolio that seeks to automatically balance risk by holding 60% in stocks and 40% in bonds.

It sounds sensible enough, but history shows that people who invest by this rule have been leaving a lot of money on the table for a long time:

60/40 Portfolio Pays Too High a Price for Low Volatility

One quick glance at US stocks, seen here in purple through the Vanguard Total Stock Market ETF (VTI), and bonds, in orange through the Vanguard Total Bond Market ETF (BND), shows a problem.… Read more

Read More

How to Collect $132,000 in Dividends on a Million Dollars

While vanilla investors worry along with the herd, we contrarians are buying. And oh, the yields we have available!

As I write to you today, I’m staring at no less than 29 income funds that yield more than 8%. Twenty-nine paying more than eight!

For retirees with a million-dollar portfolio, this is $80,000 per year in dividend income. Actually, more, because some of these funds pay up to 13%.

Why would we sell when this is the best time to buy in years? I explained this while yapping with Moe Ansari on his Market Wrap program. Moe asked me: “We hear all the ‘Doom and Gloomers’ out there.… Read more

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Homes Are Peaking, Stocks Are Bottoming. It’s Time to Grab This 9.9% Dividend

This wild economy has set us up with an opportunity to smartly “time” both the real estate and stock markets—and grab ourselves a hefty 9.9% dividend along the way.

I’ll show you a ticker we can use to do it in a moment. But first, let’s talk about the stock/real estate “two step” I’m proposing—starting with the state of play in the housing market, which has changed a lot in the last few weeks.

House Prices Look to Be Peaking

It comes as a surprise to no one that house prices are on a tear these days, hitting an average of $500,000, according to the latest numbers:

When most Americans buy their primary residence, they aren’t primarily focused on the sticker price; their monthly mortgage cost is what they’re really looking at.… Read more

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This $14 Fund Pays an Amazing 8.4% Dividend

I’m about to show you three potent investing trends that are being drowned out by the media noise. Then we’ll uncover three snubbed funds set to ride these surging trends to big gains (hint: one of these buys pays an amazing 8.4% dividend!).

Let’s get started.

Trend No. 1: A Still-Roaring US Economy

Take a close look at the chart below. See how every quarter in 2018 has been ahead of every quarter since 2015 by a mile?

Here’s the funny thing: despite that, 2018 gave us the first bear market in stocks since 2008.

It makes zero sense … and it’s why I’ve been pounding the table on stocks since they started falling last year.… Read more

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