When it comes to investing, too many folks ignore the signal and listen to the noise.

Case in point: one of the biggest stories of 2018—a looming trade war between America and China. Lately, the story has mutated into one about a trade war between America and, well, just about everyone—Europe, Asia, Mexico, even Canada!

But this trade war is noise—2018 has been a great year for stocks, and it’s going to get even better. Further on, I’ll give you a couple great ways to cash in.

First, a look at the facts, which are plain for everyone to see … and they clearly prove the naysayers wrong. You only have to look as far as corporate earnings.

American Businesses Are Booming

In the first quarter, profits soared a shocking 24.9% and went even higher for companies selling outside the US. At the same time, exporters saw 13.1% sales growth, while all S&P 500 companies’ sales were up 8.2%.

So all great news, right?

Funny thing is, while this news was trickling out, the stock market did this:

Mr. Market Takes a Nap—and Gives Us Our Shot

While the data told us companies’ stocks should be soaring, they were grounded—and the early-year correction held on, even as the data got better. More recently, stocks have been rebounding, as investors finally noticed 3 locked-in trends driving the market higher.

#1: Fatter Profits, Higher Stocks (it’s inevitable)

Second-quarter earnings look strong, with 19% gains expected. And that trend of exporting companies outperforming importing ones is still there (net exporters are expected to see 23.9% earnings increases), again proving the trade-war hysteria wrong.

And I know I don’t have to tell you that where profits go, stock prices follow.

Here’s yet another reason why now is a great time to get in: because of this breakneck earnings growth, the S&P 500’s forward 12-month P/E ratio is 16.6, lower than the long-term average of about 17. But most folks miss the fact that since the S&P 500 is dominated by tech companies that didn’t exist decades ago, and since tech firms tend to have higher P/E ratios, that 16.6 level is even lower than it looks.

#2: Sales—the Key to Rising Profits—Are Heating Up

If a company is growing earnings while revenue slides, it’s probably cutting costs and not investing in itself. But if revenue is rising, obviously the market wants more of its product, and that’s never bad.

And revenue growth is going up. In the first quarter, sales rose 8.2% for the S&P 500, and they’re expected to rise 8.7% in Q2. Simply put: it’s getting easier for businesses to grow, and who wouldn’t want to invest in that kind of market?

#3: No Bubbles in Sight

What’s more, there’s nothing in the economy (with the exception of Bitcoin and cryptocurrencies, which I warned about at the start of 2018) that looks like a bubble.

Corporate-debt levels are modest; default rates have been falling since the end of 2015 (even though this is when the Federal Reserve started raising interest rates); housing-price growth keeps moderating; and other indicators (consumer-debt ratios, inflation, unemployment) look strong.

In short, despite the immature politics and hysterical panic we read about every day, Americans and companies are managing their financial lives in a mature, healthy and sustainable way. And that’s great for the market.

Please don't make this huge dividend mistake... If you are currently investing in dividend stocks – or even if you think you MIGHT invest in any dividend stocks over the next several months – then please take a few minutes to read this urgent new report. Not only could it prevent you from making a huge mistake related to income investing, it could also help you earn 12% a year from here on out! Click here to get the full story right away. 

Source: Contrarian Outlook 

There is a general misconception that rising interest rates are always bad for real estate investment trust (REIT) values. However, history shows that REITs have outperformed 75% of the time during the last 16 periods of rising interest rates. One reason is that quality REITs will grow their dividends, and if the dividend increases keep up or exceed the interest rate increases, you are better off owning the REIT shares.

Buying shares in the month before a dividend announcement is one strategy that can produce a quick start to a new for you REIT investment. Most REITs increase their dividend rate once a year, and then pay that new rate for the next four quarters. From the way share prices change, it is apparent the investing world is not aware of the timing of dividend boosts in the REIT world. I maintain a database of about 130 REITs and include which month each usually announces its dividend hikes.

Summer is one season with the fewest number of increase announcements. However, it can also be an opportunity because the market is not looking for higher dividend rate announcements. There are three REITs that should announce higher payouts in July. You can pick up shares now, and when a new higher dividend is announced you get the double bonus of a possible share price increase on the news and the guaranteed benefit of a higher yield than the current quoted rate. Here are three stocks to consider buying in June for a July dividend increase.

Select Income REIT (Nasdaq: SIR) owns 100 buildings, containing 17 million square feet that are 88.7% leased. In January the company spun off its 266 industrial properties into a new REIT, Industrial Logistics Properties Trust (NYSE: ILPT). SIR retained 69% ownership in the new REIT and consolidates the industrial company results to its income statement. Revenue growth is generated by built in rent escalators and the development of raw land industrial properties at ILPT.

Select Income has steadily increased its dividend since the company’s IPO in early 2012. However, last year, there was not an increase. FFO per share has continued to grow and it is probable that SIR will get back on the dividend growth track this year. The next dividend announcement will be in mid-July, with a record date a week later and payment in mid-August. SIR currently yields 9.5%.

National Retail Properties, Inc. (NYSE: NNN) is a traditional triple-net lease REIT. The company owns over 2,800 (up by 300 in the last year) free-standing, single tenant retail properties. most of the REIT’s tenants are in business that cannot be hurt or replaced by online sellers. The top types of businesses are convenience stores, casual and fast food restaurants, auto service shops, fitness outlets, movie theaters and auto parts stores. When acquiring new properties NNN focuses on buying stores with great locations over high quality tenants. The good locations mean that the tenants will be successful and be able to pay the rents. Also, if a tenant does leave, it will be easier to re-lease a property in a great location.

NNN is a Dividend Aristocrat and has increased its dividend for 28 consecutive years. The current dividend is 71% of FFO. NNN will announce its next dividend boost in mid-July with record date at the end of the month and payment in mid-August.

Dividend growth has been about 4% per year and the current yield is 4.5%.

EdR, Inc. (NYSE: EDR) develops, acquires, owns and manages collegiate housing communities located near university campuses. Currently the company owns 79 (up 13 in the last year) communities in 50 different university communities. These communities are located 1/10^th to 1/3^rd of a mile from the campuses. The college housing business model has produced stable revenue growth, averaging 3.7% per year same store gains. Development and acquisitions boost that core growth rate.

Last year, EDR increased its dividend by 2.6%. Recently, the company sold a handful of older properties and will invest the proceeds into new development. FFO for 2018 will be flat compared to last year. I expect a dividend increase in the 2.0% to 2.5% range. EDR will announce its next dividend boost in mid-July with record date at the end of the month and payment in mid-August. The stock currently yields 4.1%.

After a long period of low volatility, the measurement of stock price movement has moved much higher in 2018. Higher volatility is usually accompanied by big down days in the stock market. Over the last five months, the U.S. market has turned from a place of easy profits to one that has been tough on investor portfolio values. To make lemonade from lemons, consider those investments products that can pay you more based on increased volatility.

Measured volatility increases when the stock market goes down. The reason the metric was so low in 2017 is because down days were few and of limited magnitude. A recent article from Bloomberg highlighted the fact that in 2018 the average down day move of the S&P 500 this year has been 24% greater than the average up day gain. This is the largest gap since 1948. As I noted, down days result in increased volatility, so it’s understandable that even though the current S&P 500 is close to where it started the year, volatility has made stock investing more nerve racking. This year-to-date chart of the SPDR S&P 500 ETF (NYSE: SPY) graphically illustrates the volatility.

The widely quoted volatility index or VIX is derived from the prices of options contracts trading against the S&P 500. Many investors do not know that VIX is just a measure of options prices. This means that when volatility or VIX is elevated, traders who sell options are making more money. While options trading can be complicated and risky, there are income focused investment products that use option selling to enhance cash flow and support dividend payments from a portfolio that without options would not carry as attractive a yield.

You can find these buy-write or covered call products in the form or ETFs or closed-end funds. When you invest in one of these funds, you should look for recent dividend increases due to higher volatility, or if you buy shares in funds that haven’t yet increased payouts, sell the shares if you don’t get a dividend boost in the next quarter or two.

Here are five funds to consider:

PowerShares S&P 500 BuyWrite ETF (NYSE: PBP) is the largest buy-write ETF by assets under management. As an ETF, the fund tracks a specific index, in this case the CBOE S&P 500 BuyWrite Index.

This strategy consists of holding a long position indexed to the S&P 500 Index and selling a succession of covered call options, each with an exercise price at or above the prevailing price level of the S&P 500 Index.

The fund’s one, three and five year annualized returns have been 6.59%, 6.36%, and 6.57%, respectively. These returns reflect the ETF’s 5.0% yield plus most share price gains. Dividends vary significantly from quarter to quarter.

Nuveen S&P 500 Buy-Write Income Fund (NYSE: BXMX) is a closed-end fund that seeks to substantially replicate the price movements of the S&P 500 Index and by selling index call options covering approximately 100% of the Fund’s equity portfolio value with a goal of enhancing the portfolio’s risk-adjusted returns.

This fund has picked up more return from share price gains, averaging 10.7% over the last three years, against a 7% dividend yield.

Pricing is reasonable, with BXMX shares trading at a 1.3% premium to NAV.

Horizons NASDAQ 100 Covered Call ETF (Nasdaq: QYLD) is an ETF that tracks the CBOE NASDAQ-100® BuyWrite Index. As a result, this ETF will be more focused on the large technology stocks that make up a large part of the Nasdaq 100 stock index.

QYLD pays monthly dividends that have been quite consistent.

One-year and three-year average returns have been 12.3% and 10.3%, respectively.

The ETF carries a 10% yield, so most of your return will be the dividend payments.

Nuveen Nasdaq 100 Dynamic Overwrite Fund (Nasdaq: QQQX) is a closed-end fund using the Nasdaq 100 Stock Index as its basis for covered call writing.

Nuveen puts the “Dynamic” in this fund by selling call options on 35% to 75% of the value of the Fund’s equity portfolio –with a 55% long-term target– in an effort to enhance the Fund’s risk-adjusted returns. QQQX has put up an impressive 18.66% average return for the last three years while paying an approximate 6% dividend.

This is a buy-write fund that will give you a greater portion of the changes in the underlying stock index – either up or down.

QQQX is trading at a very stiff 15.6% premium to NAV.

First Trust Enhanced Equity Income Fund (NYSE: FFA) is a closed-end fund where the managers actively manage the stock portfolio and enhance income by selling call options.

The fund has produced a 6.8% average return for the last three years, and 9.5% per year over the last five years. Currently call options are out on 55% of the portfolio.

The dividend yield is a handsome 7.4% and the dividend rate has been increasing since 2013.

The shares are trading at a 6.1% discount to NAV.

Today I’m going to take you inside the most disrespected, criticized, lambasted and just plain ignored investments on the market today.

Why would I do that?

Simple. Because if you’re not as rich as you’d like to be, these unloved income plays are the perfect way to get you there.

I’m talking about closed-end funds (CEFs), a group of investments that, with a bit of effort (which I’m happy to put in for you) can hand you big, fast upside, safe cash dividends of 8% and higher—or both.

So why do so many investors see CEFs as perennial money losers?

Let’s take a look, using a pick every dividend fan should know about (but doesn’t) as an example: the Delaware Investments Dividend and Income Fund (DDF), a CEF with a massive 11.2% dividend yield and boasting a history of outperformance nearly everyone has missed.

Never heard of DDF? I’m not surprised. It has only $92.9 million in assets under management and a 2.1% expense ratio. Both of these set off alarm bells in most investors’ minds. Massive fees! A tiny fund!

Worse, if you compare DDF’s return to that of the S&P 500, you’ll see this:

A Complete Dud … Right?

Again, not looking good! But remember, this doesn’t include DDF’s huge dividend, which is about 9 times as much as the typical S&P 500 stock pays. Add that in and we get this:

Dividends Make DDF a Market-Crusher

That’s right: as I said above, this tiny fund is beating the market and has been doing so most of the time over the last decade.

Also, it currently trades 3.5% below its net asset value (NAV, or the real market price of its holdings), so you’re getting DDF’s portfolio, its 11.2% dividend yield and its outperformance at a discount.

And since this performance is post-fees—a point I can’t stress enough—we can say with confidence that DDF’s fund managers are earning their keep, despite how high those fees appear to be at first glance.

Now DDF isn’t looking so easy to dismiss, is it?

The Biggest CEF Investing Fear Debunked

When it comes to CEFs, fear of market underperformance is just one issue I hear from investors. The bigger one is that these funds actually lose money over time.

Again, these folks are looking at the wrong chart. It’s true that many CEFs have had their market price decline slightly over time, although in most cases those CEFs have also paid a big income stream at the same time. If the market price goes down 1%, but investors have had a 9% dividend at the same time, investors still have a strong positive total return of 8%. And that return is given out as cash, investors can use that money however they wish—whether it’s using the money today or reinvesting it in the CEF. The control is yours.

Good luck doing that with your typical S&P 500 stock! And even better, unlike stocks, some CEFs are specifically designed to give you tax-free dividend payouts, like the two funds I reveal here.

But do they still, on average, earn a profit?

The answer is simple: yes.

Of the near-500 closed-end funds tracked by my CEF Insider service, only 37 have suffered a loss over a long period of time. And 29 of those are relatively new funds whose losses have happened over the last couple years. When looking at funds with a 10-year track record or longer, only eight have had a negative return over the last decade.

That’s a miss rate of 1.6%!

And when we look at the eight money losers, the cause of their problems becomes obvious.

Three of these CEFs—the Central Europe, Russia & Turkey Fund (CEE), Latin American Discovery Fund (LDF)and Korea Fund (KF)—are emerging-market funds whose assets have been under attack from a strong dollar, declining energy prices and growing geopolitical instability.

Another three—the Cushing MLP Total Return Fund (SRV), GAMCO Global Gold Natural Resources & Income Fund (GGN) and Adams Natural Resources Fund (PEO)— focus on commodities and energy stocks and have been hit by the crash of 2008–09 and the 2014 oil-price collapse.

That just leaves two funds—the Alpine Global Dynamic Dividend Fund (AGD) and the Alpine Total Dynamic Dividend Fund (AOD). Notice something in common? That’s right: the same firm has managed both and, to put it bluntly, both were poorly run.

There has been pressure on these two funds for years because of this poor management, which is perhaps why Alpine Funds agreed to hand over control to Aberdeen Asset Management in early May 2018. And since Aberdeen has a better track record and high-quality managers, there’s good reason to expect AGD and AOD to stop losing money and finally become profitable.

So what’s the key takeaway here?

Simple: if you avoid CEFs whose underlying assets are being hit by political turmoil, economic headwinds or poor management, you’ll give yourself a great shot at earning a nice gain and a hefty income stream over time.

If you feel trapped “grinding out” dividend income with popular 2% and 3% stocks and funds, here’s the three-letter acronym that will fund your retirement:

C-E-F

For whatever reason, closed-end funds don’t have nearly the following – or analyst paperazzi – that dividend-paying stocks boast. This “secret” is one of the last great efficiencies in an otherwise tough-to-beat market.

And we contrarian income hounds will gladly take this edge…

After all, it doesn’t make much sense that we can trade in our “dumb” stocks, ETFs and mutual funds for superior tickers that:

• Yield 6%, 7%, 8% or more,
• Pay their investors every month,
• Often trade at a discount to the assets they each own, and
• Are managed for free (I’ll explain more later) by a top-notch investment manager.

Let’s start with an example featuring stock-based CEFs. For those of you shaking your head at your portfolio’s low yield, you can actually 2X or 3X your portfolio’s yield and improve your upside potential to boot using this strategy. And it’s actually simpler than traditional stock picking.

How to Bank 6% Yields From Blue Chip Stocks

Many income investors have mistakenly parked their capital in “safe” consumer staples like General Mills (GIS), Kimberly-Clark (KMB) and Procter & Gamble (PG) in search of yield and security. Their money was safe, alright – their cash has grinded straight sideways for the last five years!

They’d have been better off “outsourcing” their dividend decisions to the great Mario Gabelli. His namesake Gabelli Dividend & Income Trust Fund’s (GDV) tends to pay around 6% or so (it yields 5.8% today). Mario’s dividends show up around the 14th of the month, every month, to the tune of $0.11 per share.

Sounds like a sweet deal, right? His investors get the benefit of a legendary money mind along with his access to ideas and cheap money. And get paid monthly to boot.

It really is quite the opportunity. The monthly dividends plus the boss’ smarts have rewarded investors who made the “one-click” investing decision to buy shares in GDV and let Mario take care of the rest:

In Mario We Trust (for 62% Returns in 5 Years)

His secret sauce is his stock selection. Meanwhile our opportunity lies with the discount – the fact that Mario’s fund tends to trade at a discount to the value of the shares it holds. Over the past three years, GDV has traded at an average discount of 10% to its NAV (net asset value) – which means investors have bought his stocks for just $0.90 on the dollar.

(Since GDV is a CEF, it has a fixed pool of shares – versus a mutual fund, which can simply issue more shares anytime it wants. The restricted supply means the fund’s price trades like a stock – which means it can stray from its NAV.)

Mario’s brilliance at a bargain is one example of our “CEF edge.” With $1.9 billion in assets, this particular fund is too small for big players to put money to work. Which works out perfectly for us.

And in CEF-land, stocks aren’t the only assets with price upside. Let’s now talk about way to further accelerate these returns. As nice as Mario’s 60% in five years is, I’m going to show you how to bank that much in just two!

How to Boost Your Bond Yields to 8%+

There are serious deals available in secure bonds. No safe bond pays 8% itself, of course. But it is possible to generate 8% and even 9% or more from a portfolio of reliable bonds.

You can even diversify your portfolio, bank these safe 8%+ and hire one of the best bond managers on the planet. For free, to boot!

It just requires a bit of contrarian thinking – and knowing which publicly traded funds these guys are managing behind the scenes (via their often-underrated CEFs).

Here’s a real-life fixed income bargain. You probably know the “Bond King” Bill Gross. How about his successor, Dan Ivascyn?

When Gross left PIMCO, a tide of cash followed him out the door. But the flow of money quickly subsided when Ivascyn stepped to the plate and outperformed Gross himself. No wonder PIMCO let the King walk out the door – they had their next superstar in waiting!

A money manager of Ivascyn’s caliber will usually cost 2% annually (plus 20% of profits). And it’d take a million bucks or two to get his attention.

But from time to time you can hire him for free. In fact there are times you’ll be paid up front to give him your money!

And like buying a regular stock or mutual fund, you can buy this super CEF with one-click from your computer (or tap from your phone) by purchasing PIMCO’s Dynamic Credit and Mortgage Total Return Fund (PCI).

PCI charges a 2% management fee. But it’s easy to get the fee comped – if you simply buy the fund when it trades for a discount.

For top-notch managers like Ivascyn, the fund’s price usually wanders above its NAV. Investors are willing to pay more than $1 for a dollar in assets just to get in:

Big PIMCO Premiums Today

But I always demand a discount. A 2% discount means our management fee is comped. A bigger bargain means we have some upside (as the discount window closes) and our yield is higher than it would be if the fund traded for fair value (because income is earned per NAV unit – so the less we pay for it, the better).

The three funds above are trading at big premiums however. Is it possible to ever get Ivascyn’s expertise at a discount? You bet.

First-Level Worries to the Rescue

PCI had been neglected by investors because of its strategy focused on mortgage-backed securities (MBSs), which had the lead role in the last financial crisis. They have recently been immortalized in the book and movie The Big Short. MBSs blew up the financial system in 2008 and have been outcasts ever since.

But a “second-level” look at mortgage payments showed these assets have successfully completed financial rehab. They quietly began to enjoy the benefits of clean living – with mortgage defaults and delinquencies trending down. Ivascyn and his team capitalized on this misplaced despair.

Two years ago, we added PCI to our Contrarian Income Report portfolio. The fund traded at a 10% discount to its NAV and yielded an incredible 10.7%. This “free lunch” was gradually gobbled up as these safe bonds crushed the stock market at large:

Ivascyn Worth Every Penny: +58% Net of Fees!

Our secret here was our “no brainer” purchase of a 10%+ yield at a 10% discount. Ivascyn did the rest – not only did he keep his monthly distribution funded, but he bought bonds that went up in value as rates rose.

Even after we pocketed these generous monthly payouts, the fund’s NAV sits 18% higher today than it was two years ago. Proving that it is possible to bank plenty of upside from secure bonds. You just need to know where to look – and CEFs are the ideal place to start.

Source: Contrarian Outlook 

Year-to-date my Hidden Yields subscribers have booked total returns (including dividends) of 155%, 30% and 27%. These profits inspired a common question:

“How’d Brett know when to sell?”

Most investors focus on buying. But selling is an ignored art. And leave it to savvy readers like you to recognize this.

I believe in letting winners run, of course, especially with respect to dividend growers. Sometimes there’s never any reason to actually sell a stock if the dividend’s sponsor is consistently growing its profits and dishing them with shareholders.

Other times, however, we’re better off booking gains and re-deploying our money to more promising pastures. Which brings us back to my readers’ prescient question – how’d I know, because they want to be able to identify sell signals, too.

Remember, there are three ways a stock can pay us:

1. With a dividend today,
2. By repurchasing its own shares (to make each remaining one intrinsically more valuable), and/or
3. By boosting its payout tomorrow so that its stock price follows its dividend higher.

Our Hidden Yields formula focuses on the third – and most lucrative – strategy. It’s led us to 24.3% annualized returns to date. But it takes a few months worth of patience to achieve these gains, because we give up the most obvious strategy – dividends today – in exchange for this price upside tomorrow.

Sell Signal #1: Slowing Dividend Growth

Which means if a dividend grower isn’t growing that payout fast enough, we should move on.

Earlier this year, warehouse landlord and Hidden Yields alumni First Industrial (FR) raised it quarterly payout by 3.6%. That may be enough to excite more “basic” dividend investors, but it doesn’t cut it for us.

FR had been fine for us. In nearly two years, my readers and I saw its payout climb by 14%. We enjoyed 21% price gains too. Add up our dividends and our share appreciation, and we banked 27% total returns.

FR Gains: 21% Price + 6%+ Dividends = 27% Total Returns

“Fine” dividend growth isn’t enough for us, however. So we parted ways as friends and put FR back on our watch list.

Sell Signal #2: Low “Relative” Yield

If you want to make real money with stocks, you should always put your money with the faster dividend grower. Boeing was a great example – we added it to the Hidden Yields portfolio in December 2015. Two massive dividend raises since have sent the stock soaring to the tune of 157% total returns for us:

Boeing Soars With Its Payout

Our catalyst was the 57% cumulative “raise” from Boeing, which in turn rocketed its stock price higher. It certainly helped that we bought shares when they were a coiled spring, due to “catch up” with the firm’s ever-growing payout.

Blue Line (Price) Was Due to Catch Up – and It Did

But the curse of high prices is low yields. And Boeing’s price moonshot cratered its current yield:

The Curse of a High Price: A Low Yield

Could shares keep moving higher? Sure. But we’re not in the “buy and hope” business. We banked our 157% gains and put our cash into the next 100%+ mover.

Such as? I’ll share seven stocks with similar setups in a minute. First, let’s wrap up this lesson with our third potential warning flag.

Sell Signal #3: Business is Fine Today, But Looks Dicey Tomorrow

“First-level” dividend growth investors look in the rearview mirror, fawn over past payout increases, and declare a stock an “aristocrat” simply because its past performance is good.

Warren Buffett, the guy who made a fortune on Coca Cola (KO) and inspired countless copycats who saw their late money grind sideways, said it well:

“If past history is all there was to the game, the richest people would be librarians.”

When you and I buy next year’s payout today, we need to picture the future. Are we looking at a retail REIT that is having its rent checks intercepted by Amazon (AMZN)? Or are we looking at an Amazon-proof retailer that is actually a bargain due to overblown worries?

Let’s consider the case of Best Buy (BBY), which boldly decided to take Amazon head-on in 2012 when turnaround CEO Hubert Joly took the helm. And not only did the electronics giant live to tell about it, but it’s now leveraging Jeff Bezos’ website as a shopping channel of its own!

In recent years, Joly has been smartly “doubling down” on the quality of its retail stores (which Amazon doesn’t have). This has powered impressive free cash flow (FCF) growth, which has in turn driven serious stock returns:

Expert Service. Unbeatable Stock Price.

What else doesn’t Amazon have? A dividend, of course. Meanwhile Best Buy pays one, and its growth has been spectacular. Joly & Co. just raised their dividend by 32%. This “high velocity payout” is now up 165% in the last five years! It’s a big reason investors have enjoyed 232% returns in the face of regular Amazon fears.

We dividend hounds don’t get the benefit of hindsight. We must determine up front whether the light at the end of a tunnel represents brightening prospects – or a train rolling in to smash our firm’s entire business model.

This Friday: 7 Fast Dividend Growers with Bright Futures and 100%+ Upside

Life is too short to waste our time with middling dividends! Since share prices move higher with their payouts, there’s a simple way to maximize our stock market returns: Buy the dividends that are growing the fastest.

Don’t be fooled by modest current yields. They often don’t capture the growth potential (and it’s the dividend’s velocitythat really makes us big money – not its starting point).

How to we buy high velocity dividends, the aristocrats of tomorrow? It’s a simple three-step process:

Step 1. You invest a set amount of money into one of these “hidden yield” stocks and immediately start getting regular returns on the order of 3%, 4%, or maybe more.

That alone is better than you can get from just about any other conservative investment right now.

Step 2. Over time, your dividend payments go up so you’re eventually earning 8%, 9%, or 10% a year on your original investment.

That should not only keep pace with inflation or rising interest rates, it should stay ahead of them.

Step 3. As your income is rising, other investors are also bidding up the price of your shares to keep pace with the increasing yields.

This combination of rising dividends and capital appreciation is what gives you the potential to earn 12% or more on average with almost no effort or active investing at all.

Please don't make this huge dividend mistake... If you are currently investing in dividend stocks – or even if you think you MIGHT invest in any dividend stocks over the next several months – then please take a few minutes to read this urgent new report. Not only could it prevent you from making a huge mistake related to income investing, it could also help you earn 12% a year from here on out! Click here to get the full story right away. 

From the Las Vegas MoneyShow, Paris Hotel.

This week the Investors Alley editorial team is at the annual Las Vegas MoneyShow. As I have for the past several years I will be making presentations covering a diverse set of dividend stock investment strategies. This is a good time to share my stock picks for the show’s annual Top Picks feature.

I greatly enjoy attending and participating in the Las Vegas MoneyShow each May. It is a great event for investors and traders looking for top notch education and exposure to new ideas and strategies. I personally feel like I learn as much from my interactions with individual investors as they get from my presentation. OK, maybe not quite as much, since I humbly submit my presentations are very good and usually are in front of a packed room.

As a regular contributor to MoneyShow as a presenter and writer, for the last several years I have been asked to participate in their annual Top Picks survey released at the beginning of each year. For the survey I submit two stocks, one is a conservative pick and the other is an aggressive pick.

Since I am a dividend focused analyst, my picks are always dividend income stocks. The list selections from the writers and analysts invited to participate in the MoneyShow survey are published over the first several weeks of the year. Since I am here at the MoneyShow, I thought it would be a good time to see how well my picks have done through the first one-third of 2018.

My 2018 Conservative Income Stock Pick: MGM Growth Properties LLC (NYSE: MGP)

In April 2016, hotel and gaming company MGM Resorts International (NYSE: MGM) spun off about two-thirds of its hotel properties into a new real estate investment trust (REIT) IPO. MGM structured the new company, called MGM Growth Properties LLC (NYSE: MGP), to have a high level of cash flow safety to pay the planned dividend and with the potential for future growth.

At the IPO, MGM Growth Properties received seven properties on the Las Vegas Strip: Mandalay Bay, The Mirage, Monte Carlo, New York-New York, Luxor, and Excalibur. Outside of Nevada, at the IPO the REIT owned the MGM Grand in Detroit, the Gold Strike in Tunica, Mississippi and the Beau Rivage in Mississippi. Since the IPO, the REIT has purchased interest in one additional property from MGM and made one non-MGM property purchase bringing the current portfolio total to 14.

All properties are being leased by subsidiaries of MGM under a single, triple-net Master Lease. The Base Rent has a 2% annual escalator. The Percentage Rent is fixed for six years, and after that will be a percentage of revenue generated by the properties. The Master Lease has an initial lease term of ten years with the potential to extend the term for four additional five-year terms at the option of the tenant. The lease has a triple-net structure, which requires the tenant MGM subsidiary to pay substantially all costs associated with each property, including real estate taxes, insurance, utilities and routine maintenance.

In 2017, the business operations of the properties to be owned by MGP generated earnings before interest, taxes, depreciation and amortization (EBITDA) to provide 4.1 times rent coverage. Since the great recession, EBITDA has varied, but has been at least 2.2 times the lease annual rental rate. The master net lease plus the high level of EBITDA to rent coverage is what makes MGP a conservative income stock.

So far in 2018, the MGP share price is down 2.1%. Two $0.42 dividends have been paid, bringing the total return to 0.83%. I forecast the MGP dividend will be increased by 8% to 10% this year, which will propel the stock to a low double-digit return for the full year.

Current yield for MGP is 5.9%.

My 2018 Aggressive Income Stock Pick: Energy Transfer Partners LP (NYSE: ETP)

At the end of 2017 I forecast that the energy midstream/infrastructure sector would return to valuation growth in 2018 providing lots of upside potential in the group. Through 2017 MLP sector market values declined sharply even as business fundamentals continued to improve. 2018 should be the year when investors realize very attractive returns from the quality companies in the sector.

Energy Transfer Partners LP (NYSE: ETP) is one of the largest MLPs, with a $21.6 billion market cap. The company owns and operates an extensive network of natural gas and crude oil pipelines, terminals and processing facilities. Energy Transfer Partners owns assets in all the major oil and gas energy plays. Those assets allow for commercial synergies across entire midstream value chain, including gas, crude and natural gas liquids (NGLs).

In recent years the company has invested heavily in new growth projects and will have $10 billion worth of those projects coming on line between mid-2017 and the end of 2019. As the projects start to earn revenues, the Energy Transfer Partners distributions will be covered by free cash flow and continue to grow.

Market participants are primarily worried about ETP’s large debt load, which has grown to fund the growth capex and currently stands at over $34 billion. Management has stated that they will not need to access the capital markets in 2018. With new projects coming on line, EBITDA growth will quickly bring down the debt/EBITDA ratio.

With a 13% yield at the end of last year, the market was pricing ETP with the expectation of a dividend reduction. Management is determined to continue and even grow the current distribution rate. Once investors see the current payout is stable and well covered by cash flow, the ETP share price will rise to bring the yield down to as low as 8%. To get the yield down to that level, the share price would need go close to double.

Currently, ETP continues to yield 12.5% and has paid two dividends so far this year. Total return to date is 9.75%. I see strong potential for this stock to add another 20% to that total by the end of this year.

Source: Investors Alley 

With the jaw-dropping stock-market dives we’ve seen in the last 3 months, you can be forgiven if your stomach tightens just a bit when you go to check your retirement account.

So today I’m going to give you my 3 best tips for securing your hard-earned cash—and even better, locking in a dividend stream you can easily live off of in retirement.

And no, you won’t need a seven-figure nest egg to pull off what I’m going to show you now.

Step #1: Diversify the Right Way

You no doubt know that diversification is key to protecting your wealth, but if you only go halfway, it will end in disaster. By that I mean doing what many folks do: throw their money in a low-cost index fund, like the Vanguard 500 Index Fund (VOO), and leave it at that.

But these people have forgotten their history. Like the last time the S&P 500 did this—just 10 short years ago:

50% of Your Nest Egg—Gone in a Year!

So how do we save our hard-earned cash from the next swoon?

One easy way is to buy US Treasuries to offset any hits you might take in the stock market, since Treasuries tend to go up when stocks go down (and vice versa):

The Treasury Cushion

But since Treasuries don’t go up as much as stocks go down in bear markets, this isn’t going to cut it. We need to dig deeper.

There are many other investments that go their own way—which isn’t necessarily in the same direction as stocks.

For example, municipal bonds tend to rise when people are more risk-averse, while tech stocks fall. So you want to make sure you have a bit of both so you can profit from one when the other goes down and avoid suffering losses that will take years, or decades, to recover from.

This is the most important tool the ultra-rich use to protect their nest eggs. The stories you hear of multimillionaires losing everything? It’s almost always a result of failing to diversify. Take Masayoshi Son, a billionaire who lost around $70 billion (yes, with a “b”) during the dot-com crash of 2000. Why? Because all of his money was in stocks.

Step #2: Add Some Funds to Your Stocks

You want to diversify beyond just asset classes, though. To get broad exposure within each asset class, add some funds to your stock holdings.

To explain why this is important, let’s take a look at Alphabet (GOOG) and the PowerShares QQQ ETF (QQQ), which tracks the tech-focused Nasdaq 100 index. If you bet only on GOOG in 2018, you’d be down a bit on your investment. But the index? It’s up 4.2%:

The Consequences of Going All in on One Stock

Of course, you could point to Amazon (AMZN) as the better pick—it’s up 34.2% in 2018. But if you’d chosen AMZN over QQQ or GOOG in early 2016, you would’ve made the worst choice of all:

Now Who’s the Biggest Loser?

The takeaway? Buying a fund lowers your risk of buying a good stock at a bad time.

Because even if you’re right to bet on either of these companies—which have both soared over the long term—buying at the wrong time, when their rises have been overextended, would have crimped your returns.

With a fund, you get access to a lot of high-quality companies in one buy. And while you may get some at a bit of a high price, you’ll also get some cheap. So buying a fund that’s diversified across stocks lowers your risk of overpaying for just one stock, limiting your downside in the short term—a crucial move if you’re a retiree who needs to tap your portfolio for cash.

Step #3: Lock in Big Cash Dividends

The final key to protecting your nest egg is also the most often overlooked: securing an income stream.

Because if you can invest your nest egg in assets that produce income higher than your annual costs, provided that income stream never declines below your expenses, you can largely ignore market swings.

Most people ignore this because yields are lousy right now. Even with the 10-year Treasury reaching 3%, you’re still getting a measly $2,500 per month on a million bucks. That’s less than $15 per hour, less than minimum wage in a growing number of US cities.

With the S&P 500, you’re getting less—$1,525 per month in income on a million bucks. Madness!

People try to subsidize these paltry income streams by harvesting capital gains from their stock holdings—but that’s much easier said than done. Structuring payouts in a way that won’t destroy your portfolio is almost impossible—especially if you end up retiring a year or two before a recession.

To demonstrate this, look at what happens to a $1.2-million nest egg put in the S&P 500 just before the 2008–09 meltdown; while it grows a bit before the end of 2008, things go downhill fast:

Index Fund Clobbered by a Bear

As if that weren’t bad enough, it’s doubly devastating for retirees who need income from their investments. Look at what happens to a retiree during the same period who tries to live off of $45,000 in passive income on that $1.2-million nest egg:

Even with a conservative 3.8% withdrawal rate, the retiree’s nest egg takes several years to recover from the 2009 loss—and although the S&P 500 recovers by 2013, the retiree’s portfolio is still down 18.9% from where it was 5 years earlier.

Why? Because of a lack of a solid income stream.

To protect from this, you need to not only on diversify away from just stocks but also toward funds that get you a variety of holdings and safe dividend income.

Revealed: This “Indestructible” 10.0% Dividend Is a Must-Buy

My favorite funds for all investors—retirees and twentysomethings alike—are a special kind of investment called a closed-end fund (CEF).

If you’re not familiar with CEFs, here’s the upshot: they can (and regularly do) deliver fast 20%+ gains and massive 8%+ dividends in one single buy! They are, hands down, the closest thing to the perfect investment I’ve ever seen.

I recently released my 5 very best CEFs to buy for 2018, and I’ll reveal the complete list when you click here.

When you do, I want you to pay particular attention to fund No. 3 on my list.

It’s a totally ignored CEF paying a rock-solid 10.0% CASH dividend now. It’s run by a Warren Buffett disciple who uses the master’s battle-tested strategies to deliver outsized gains when the market is soaring—and slash your volatility when stocks fall out of bed.

And it works like a charm!

That’s why I’ve made this fund—which has been around since 1986—a core recommendation of my “safety first” CEF Insider service. Check out how it’s outperformed the market since then, with a LOT less volatility:

A Smooth Ride Higher

Imagine holding a fund like that, which rides higher like it’s on rails! Also remember that almost all of this return was in CASH, thanks to pick No. 3’s monstrous 10.0% dividend, offering even more protection from the market’s ups and downs.

Please don't make this huge dividend mistake... If you are currently investing in dividend stocks – or even if you think you MIGHT invest in any dividend stocks over the next several months – then please take a few minutes to read this urgent new report. Not only could it prevent you from making a huge mistake related to income investing, it could also help you earn 12% a year from here on out! Click here to get the full story right away. 

Source: Contrarian Outlook

By this point, you’ve probably heard that earnings season has been off the charts so far.

But there’s a problem.

You see, corporate profits are so good that the big buying opportunity I’ve been telling you about for months is vanishing fast!

Why? Because US firms are too profitable, and economic growth is too strong for the herd to not want to pile into stocks very soon.

So today we’re going to front run those folks by buying before they do.

In a moment, I’ll show you not only why you should buy now, but 2 funds you that are solid bets for serious upside and a huge dividend stream of 7%.

Funny thing is, these 2 funds hold the S&P 500 and Dow stocks you know well. And they pay that huge income stream and return 9% in gains and dividends, on average, every year.

Before I get into these funds, let’s take a look at just how good this market is.

A Profit Bonanza

In February I pointed out that earnings growth was set to remain strong for 2018, and again nearly a month ago, I pointed out that earnings estimates were going up as stocks went down. This is very rare. When it does happen, it’s usually a blaring signal of a strong bull run.

And now that companies are actually reporting earnings, it looks like I wasn’t optimistic enough.

So far, nearly 20% of S&P 500 firms have reported, and 80% of those companies are reporting earnings per share (EPS) far above estimates. Heck, in some sectors, all companies are crushing the Street’s forecasts!

Earnings Come in Piping Hot …

Tech and finance are doing well, thanks to non-stop demand for gadgets and higher interest rates, which boost bank profits. But sectors that have been beaten down so far in 2018, such as energy and real estate, are also doing better than expected.

This all means that earnings growth so far is clocking in at 18.3%, well above the 17.1% growth rate forecast at the end of March and putting us on track for what could be the best earnings record in history.

Yet stocks have gone nowhere in 2018.

… But Investors Miss the Memo

Bottom line: buy signals simply don’t get much stronger than this.

2 Funds to Put on Your Buy List Now

Now you could just run out and buy the SPDR S&P 500 ETF (SPY). You’d get a 1.8% dividend yield, turning your $100,000 investment into $152.50 per month in income. Or you could buy the two other funds I’m going to spotlight today and get almost 4 times that: $591.67 per month in income.

Earnings Season Pick #1: 7.2% Income From the S&P 500

The first fund I’ll show you is the Nuveen S&P 500 Buy-Write Income Fund (BXMX). As the name suggests, it invests in the S&P 500 while also selling “insurance” on those same stocks in the form of “call options” to give you a higher return and a higher income stream. The fund yields 7.2% and has mostly matched the S&P 500’s total return over the last 3 years (note that all returns are after fees).

A Hidden Cash Advantage

So if SPY and BXMX are nearly identical in performance, why not just go with the ETF?

Simply put, the income. Because of its bigger yield, a larger portion of the returns you get come in the form of cash paid in the form of dividends. And unlike SPY, where your capital gains can come and go with a volatile market, you can take your cash from BXMX and put it elsewhere—or, if you prefer, straight back into BXMX. The choice is yours.

Earnings Season Pick #2: Top Stocks, Low Volatility

Now let’s look at the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX), which is almost identical to BXMX except that it buys the Dow Jones instead of the S&P 500. Since the Dow tends to be less volatile, this is a good option for toning down market swings.

Oh, and this fund also pays a 6.9% dividend yield.

The best part is that DIAX is actually beating the total return of the Dow Jones index fund, the SPDR Dow Jones Industrial Average ETF (DIA):

Beating the Market With 3x the Dividend Income

It’s tough to argue with outperformance—but outperformance that includes an income stream that is 3.4 times greater than that of the index fund ($575 per month versus DIA’s crummy $169.17 on the same $100,000)? No one can quibble with that.

1 Click for Even Bigger Dividends and a Safe 28% Win This Year

I’ve got 5 other “limitless” profit machines poised to deliver income and gains that go far beyond a medium-term earnings-season pop.

I’m talking about:

• • A safe—and growing—8.2% average dividend, and
• 28%+ total returns in the next 12 months.

What’s totally bizarre about this situation is that these 5 funds are even further off the radar than BXMX and DIAX, leaving them trading at even wider discounts (which is where a big part of our 28% total return will come from).

These huge markdowns completely break with the historical pattern for these 5 winners, and they simply can’t last, especially when you consider that these 5 funds also hold S&P 500 names expected to rack up big earnings beats.

The best thing about these 5 cash machines is that they’ve delivered market-crushing gains with much less volatility than what your average ETF investor is forced to stomach. Check out the steady climb one of these funds has piled up since inception, compared to the sickening ups and downs of the market:

A Smooth Ride Higher

The topper: this fund is run by one of the top minds on Wall Street and pays a rock-solid 10.0% dividend today!

Please don't make this huge dividend mistake... If you are currently investing in dividend stocks – or even if you think you MIGHT invest in any dividend stocks over the next several months – then please take a few minutes to read this urgent new report. Not only could it prevent you from making a huge mistake related to income investing, it could also help you earn 12% a year from here on out! Click here to get the full story right away. 

Source: Investors Alley