This Weird Disconnect Sets Us Up for 7% Dividends, Upside, Post-Crisis

The Contrary Investing Report

Investing and Trading News, with a Contrarian, Sarcastic Twist!

This Weird Disconnect Sets Us Up for 7% Dividends, Upside, Post-Crisis

If you’re like most people, you’re wondering how in the world the market can be doing this when the country has been on lockdown for the better part of two months:

Stocks Soaring

As you can see above, stocks spiked 22% since late March, going by the performance of the Vanguard Total Stock Market ETF (VTI). Meantime, the economy is a shadow of its former self: the Federal Reserve expects it to shrink 40% in the second quarter—worse than the 23% drop seen at the depths of the Great Depression.

Before you ask, no, this disconnect isn’t a recipe for another crash.… Read more

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These Blue-Chip Dividends are Backdoor Tech Plays

Somehow, some way, the stock market continues to levitate higher. Yet I see very little that’s worth buying here.

We can’t argue with the tape. Markets will do their thing, while we must do ours. And today, it’s a good time to be cautious and prepare for the possibility of another sharp pullback. (The old “retest” of the lows that most investors expected until they were swept away by the allure of rising stock prices!)

Our dream shopping list, as we’ve discussed before, should contain some blue-chip dividend stocks. Nasty bear markets are the only time we can buy these names cheap!… Read more

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2 “Guard Dog” Monthly Dividends That Fight Off a Crisis

Right now, millions of people are plowing cash into this market, gambling that the worst of the dividend cuts is behind us.

I hope you’re not one of them, because this “dividend trap” is likely to spring—and steal away the income (and value) these folks have spent years building!

Just look at the numbers: unemployment is likely over 20%. Consumer spending cratered 7.5% in March, before this mess even really got started. And now Uncle Sam is demanding that any company seeking government aid first send its payout to the scrapyard.

Meantime, even cash-rich companies are pulling in their horns, like the Walt Disney Co.… Read more

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A 5.8% Dividend With 126% Upside Ahead (contrarians only)

There’s a strong buying opportunity unfolding in an ignored corner of the market right now. Steady dividends of 5.8% (and higher) are waiting for savvy contrarians who jump on it.

By “savvy contrarians,” I, of course, mean us!

And the corner of the market I’m referring to is municipal bonds.

If you’ve been following the muni-bond saga over the last two months, you might find my enthusiasm a bit unfounded. After all, the coronavirus is hammering the finances of cities and states across the country and driving up the risk of muni-bond defaults—right? Not so fast.

Your Muni Default Risk? 0.042%… Read more

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Is This 24% Dividend (Paid Monthly!) Too Good to Be True?

“It’s my money, and I want it now!”

That’s the rallying cry of everyday folks in commercials for J.G. Wentworth, a financial services firm that offers lump-sum cash payments for structured settlements, annuities, lottery payments and more. (If you’ve never seen one of these TV spots, I suggest you try one out. They’re so bad they’re good.)

Every income investor could (and probably should) take a cue from its motto. To quote another spot: “Show us the money!”

Monthly dividend stocks, of course, pay more often than any other income investment. Dividend checks coming in every 30 days are especially handy for retirees who have bills to pay.… 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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Pandemic Payout Q&A: Your Questions, My Answers

“Brett, I didn’t sell (insert dividend stock here) in March. Should I hold my nose and sell now?”

If you sat on your hands during the March drop and subsequent bounce, you’re not alone. Many of your fellow income investors are still holding on to positions that they know they should probably sell, but haven’t yet. (I know this because I’ve heard this question from a number of you!)

Well, here’s the question I would ask you about the position:

“Is the business going to rebound to pre-pandemic levels any time soon?”

If the answer is “no” then why would you not sell the stock?… Read more

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2 Smart Lockdown Buys for 150% Dividend Growth, Upside

We’re almost three months into this crisis and three things are crystal clear:

  1. Plenty of “household-name” dividend-payers are in big trouble—and not just the ones you see in the news. When the payout cuts come, the resulting share-price drops will crush the unwary.
  2. Way too many people are clinging to blue chips yielding 2% or 3%. But is such a small payout worth it when you can lose that much in a single trading session?
  3. We can’t trust any stated yield until we verify a company’s cash flow.

This may sound a bit alarmist, but imagine if I told you in January that by mid-May, Ford (F), General Motors (GM), Walt Disney (DIS) and Las Vegas Sands (LVS) would have all either eliminated or, in Disney’s case, delayed their dividends.… Read more

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Beat the Next Crash. Grab 7%+ Dividends. Here’s How.

Has this market gone too far, too fast? Is another crash coming? And what the heck should we be buying now?

I’ll dive into all three questions today, and I think my answer to that last one will intrigue you: it’s a tech-focused closed-end fund (CEF) paying a growing 7% dividend! This under-the-radar fund also employs an unusual strategy that hedges its downside if we do get another pullback.

The One Number to Watch Now

Let’s start with where I see the market headed from here.

At its worst point in this latest crash, the S&P 500 lost about 30% of its value, and it did so in less than a month, only to begin recovering a few weeks later.… Read more

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2 Contrarian Signals to Grab 7%+ Dividends in This Crisis

If you’re making buy decisions based on the daily gyrations of the S&P 500, you’re setting yourself up for big losses—and costing yourself a shot at big dividends, too.

Why? For starters, at a 2% average yield, the popular names simply don’t pay enough. You’d need to save $2 million just to generate $40,000 in yearly dividends. And let’s be honest: if you have that much cash, you may as well just live on your $2 mil—and forget about dividends entirely!

The rest of us need a better option—one that lets us save a reasonable amount of money (I’m talking $500,000 to $600,000 here) and still generate meaningful income.… Read more

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