How a 1% Dividend Equals 68% Yearly Gains

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How a 1% Dividend Equals 68% Yearly Gains

Not sure about buying and holding stocks right now?

Me neither. The market is pricey. Meanwhile, the potential downside looks dicey. Mr. and Ms. Market seem fixated on rate cuts this year from the Federal Reserve. If we don’t get them, look out!

We may not see rate cuts in 2024 if inflation continues. And right now, crude oil prices are popping. Consumer prices are unlikely to cool while oil is high.

But, on the other hand, the Fed is engaging in quiet QE. Gold has sniffed it out and rallied. Bitcoin, too, is going bonkers.

Cash is destined for the trash bin if the market continues to defy gravity and levitate higher.… Read more

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No Rate Cuts in ’24? I’m Not Buying It (Here’s Why and How to Profit)

We’ve got a great shot at locking in big yields—and big dividend growth—on utility stocks. But we need to buy now, before rates start their (inevitable) decline.

I’ve got three “growth utilities”—boasting fast-growing businesses and dividends—for us to play this opportunity with below.

Best part is, thanks to their healthy balance sheets, these three have a built-in “buffer” if rate cuts do get held up for a bit.

Last October’s Rate Peak Was Just Act 1

I know this plan works because, well, it’s exactly what happened last fall, when fear was everywhere and the 10-year yield scraped up against the 5% barrier.… Read more

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My Ranking of the Best 6%+ Yielding Income Investments

Let me start today’s article with an admission: Closed-end funds (CEFs) are my passion—but not only for their 8%+ dividends (often paid monthly).

The main reason I’ve been investing in these terrific high-yield vehicles for years is, in fact, very personal: Over a decade ago, CEFs’ high yields gave me enough passive income to quit my job.

I was a professor at the time, and I decided to quit to live on my income. As I started preaching the gospel of CEFs, more people heard the call, and my CEF Insider advisory, launched back in the spring of 2017, was born.… Read more

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5 Dividends That Will Soar When the Fed Cuts Rates

Let’s talk about five dividends that are set to soar when the Federal Reserve cuts interest rates.

Not that these stocks need help. They are already in multi-year bull runs because they have the power of the “dividend magnet” on their side. This is a situation where dividend growth pulls a stock’s price higher and higher.

Let’s take coffee giant Starbucks (SBUX) as an example. Starbucks has beaten the S&P 500 by more than 300 percentage points since 2010. That’s also the year in which SBUX started paying dividends.

But it’s not just that Starbucks has clobbered the broader market. It’s the way in which the stock price and dividends have largely moved in tandem, with one seemingly pulling the other higher over time.… Read more

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The Bond Market Is Booming (and these 9% Dividends Are the Best Play)

It’s no secret that corporate bonds are booming. But what might come as a surprise to some folks is that we’re not too late to get in. Through a group of well-run closed-end funds (CEFs), we can still tap big corporate-bond yields at a discount.

Even perennially gloomy Business Insider (notorious for its overdone calls for an inflation/recession-driven crash in 2022) acknowledges the terrific environment for bonds right now. Recently, BI had to admit not only that “Corporate bonds are the safest they’ve been in years,” but that this is one of the best bond markets we’ve ever seen.… Read more

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Any Bitcoin Stocks Pay Dividends? Yeah, Here’s a Back Door

Riddle me this, my fellow contrarian.

If the Federal Reserve is really tightening its balance sheet, then why is the stock market already up 10% on the year?

Why is gold at all-time highs?

And why is bitcoin going completely bonkers?

The answer is “quiet QE.”

As we discussed last summer in this column, Fed Chair Jay Powell’s words have sounded hawkish. He and his cronies talked tough about inflation. But look at their actions: the Fed has quietly provided ample liquidity to the financial markets.

Which is why dollar hedges like gold and bitcoin have soared.… Read more

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Will This REIT Portfolio – up to 9.3% – Finally Get Off the Ground?

We income investors like REITs (real estate investment trusts) because they are obligated to dish most of their profits to us as dividends. Today we’ll discuss five with fat yields between 8.3% and 9.3%.

When to buy REITs can be tricky. Generally speaking, we don’t want to buy them before rate hikes. Higher rates make money more expensive. REITs thrive on cheap money. So, the recent rate hiking cycle has been bad for REITs-at-large.

Rates and REITs Moved in Opposite Directions

Rate hikes appear done, which usually means it is time to buy REITs. After all, the Fed’s next move is likely to be a cut.… Read more

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My Advice: Park These 9%+ Paying “Convertibles” in Your Portfolio Now

Let’s talk about convertibles for a second—but not the car with a removable top that everyone thinks of when they hear that word: I’m talking about convertible bonds.

I know, a bit less flashy, right? The name causes most folks’ eyes to glaze over, but there is a (very) exciting part to this convertible-bond story: massive dividend yields. And I’m not talking the type of so-called “high” yields you get on regular stocks (3% or 4%). Or even corporate bonds, many of which pay out in the 6% to 7% range these days.

I’m talking really high yields here. Like 12% yields.… Read more

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Why the Coming “Yield Crash” Will Send These 8%+ Payers Soaring

This market bounce is strangling the payouts on everybody’s favorite ETFs. But it’s also given us a sweet setup to grab another group of funds kicking out big payouts, to the tune of 8%+ yields.

Even better, many of these funds—wallflowers to “popular-kid” ETFs—were left off the invite list for the 2023 market party. That means they’re (still) cheap today.

I know an 8% payout has a lot of appeal to most folks, with Treasury yields now yielding around 4.3%. That’s not bad, but it doesn’t leave you much after you account for still-elevated inflation.

And if your cash is stuck in an ETF, you’re getting a lame payout, well, almost all the time, but especially if you buy now: the SPDR S&P 500 ETF Trust (SPY)—which, as the name says, holds the entire S&P 500 index—yields a sorry 1.3% as I write this.… Read more

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A 13.8% Dividend Backed By the Fed

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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