This 9.2% Dividend is Ready for Rising Rates and Fed Hikes

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This 9.2% Dividend is Ready for Rising Rates and Fed Hikes

Well, that escalated quickly.

We contrarians have been ready for rising interest rates—and long-term rates have indeed begun the year with a moonshot.

The Federal Reserve has been a big buyer of US bonds since the spring of 2020. If it weren’t for this “whale” buying $80 billion in bonds per month, long rates would likely be higher already.

How much higher is anyone’s guess. But now that the Fed is “tapering” its monthly purchases from $80 billion all the way to zero, everyone is rushing to place bets. And income investors are speculating that a fair rate for the 10-year is higher than here.… Read more

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Why Dividend Stocks Are Likely to Soar in 2022

The 2022 edition of the stock market is probably going to be a mess. With the Federal Reserve pausing its money printing, we are likely to see “flights to safety” that will feature—believe it or not—our favorite dividend stocks.

Yes, it’s all fun and games in the tech-and-crypto casino when the Fed is pumping billions into the bond market every month. Its purchases, of course, were funded by money that the Fed itself printed out of thin air. This capital flowed into speculative assets like the NASDAQ in 2020 and coins with dog faces in 2021.

The trendy stocks of 2022 are likely to be our style.… Read more

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Less Liquidity and More Volatility in ’22: Good for Dividend Stocks?

The asset price “fuel” that our Federal Reserve has provided since March 2020 is going away soon. This will likely lead to continued volatility and a challenging backdrop for stocks-at-large.

Periodic “flights to safety” could benefit secure dividend stocks. We’ll touch on the outlook for income plays in a moment. First, let’s talk macro.

The stock market has been rallying for 21 months thanks to the Fed. It has gassed asset prices by buying trillions of dollars in bonds.

(Note: “Bond buying” is a polite way of saying “money printing.” The bonds were using cash that Chairman Jay Powell created out of thin air.)… Read more

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Taper Tantrum Dividend Plays with 56% (More) Upside

If I were a Federal Reserve official—and I were not currently under investigation for sketchy February 2020 trades—I’d really be tempted to “back up the truck” on key taper tantrum dividend stocks.

These obvious payout plays have already soared 56% or more year-to-date. But there’s more to come because their profits are being artificially suppressed by the Fed. (Yes, you read that right. The Fed money flood is boosting everything except for these laggards. For now.) Once this constraint is lifted—or even moderated a bit—their bottom lines are going to boom.

Today, the Fed is buying $80 billion in government bonds every month.… Read more

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These “Fed-Fueled” Dividends Whip Inflation, TIPS

Are the best things in life actually free? It depends how we handle the hidden costs.

Free coffee is good. At home, I drink one mega-cup per day. At fixed income conferences, I typically scale that “complimentary” consumption up to double-digits per day. (Hey, they’re just hotel cups.)

Free breakfast is usually better than just free caffeine. And open bar, of course, reigns supreme for your income strategist.

No doubt these freebies are baked into ticket costs, but I will gladly accept the bacon and beer challenge to get my money’s worth.

When readers write in to ask my thoughts on “risk free” yields on certain bonds, it’s time for us to talk.… Read more

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DRIP or Dry Powder? How to Best Deploy Our Dividend Profits

If you’re a regular reader, I owe you a big congratulations on the recent profits in your dividend portfolio.

Some of you are banking big yields. Others are riding dividend magnets to capital gains. A select group of savvy contrarians are profiting from payouts and price upside.

The result of your mini windfall, regardless of source, is cash. But this pile of money is not yet generating any income for us. So, what is the best way to employ these greenbacks? We have three options:

  1. Reinvest the dividend money automatically via DRIPs,
  2. Deploy the profits strategically via smart shopping lists, or
  3. Stack the dry powder for a special moment.

… Read more

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Rising Rate Dividend Plays Paying Up to 9.8%

On Sunday night, our old friend exclaimed to my wife and me: “How have you all been??”

It’d been, well, almost a year since we’d been to her bar. We had plenty to catch up on with our drink-slinging pal as we sipped and snacked. Back on the home front, our babysitter had recently resurfaced and appeared to have bedtime under control. It was nice to have a throwback evening, the type we all took for granted just 12 months ago.

In the interim, many income investors have, likewise, taken low long-term rates for granted. Not we contrarians, of course.… Read more

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The Secret to 107% Dividend-Powered Returns by December

This time last week, we talked about my favorite dividend stock for 2021. The stock yielded 6% as recently as June, but it (deservedly) gained a following among income investors in recent months.

These newcomers bid its price up (again, deservedly). In doing so, its yield shrank below 4%, and I recently found myself apologizing to my Contrarian Income Report subscribers for discussing a stock that paid so little by our admittedly lofty standards.

Well, I’m glad I brought it up to them and to you in these pages last week, because Synovus (SNV) soared 11% over the next three days.… Read more

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My Favorite Dividend Stock for 2021

A reader recently wrote in to ask:

Brett, if you could only invest in one ticker over the next year, what would it be?

I’d buy a stock backed by three financial trends that are likely to gain more attention in the months ahead. Definitely the type of firm that is due to dominate the “narrative” in 2021.

Don’t worry, this won’t simply be a story stock. Because it’s me, we’re also requiring value and, most importantly, yield with our storytelling.

So let’s start spinning the yarn. We’ll begin with Fed Chair Jay Powell and his prolific printing machine.

2021 Narrative #1: Money Printing

Powell has put on quite the show of late.… Read more

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My Personal “Set-It-and-Forget-It” Plan for 10% Dividends, 100% Upside

The mainstream crowd has gotten way too greedy—which means we could be in the teeth of a stock-market selloff within weeks.

Most folks hear the word “selloff” and gasp. But not us contrarian dividend hounds! We know that volatility is our friend. It’s easy to see this just by looking at what the market’s done in the last five years. You’d have amped up your performance a lot just by buying the dips.

Buy and Hold? Nah. The Timing of Your Buys (and Sells) Matters

This year is a classic example. If you’d bought the typical S&P 500 stock on the first day of February, pretty much at the go-go peak of early 2020, you’d be sitting on a 15% total return now.… Read more

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