After two-and-a-half years of giving income investors false hopes of a recovery, the energy infrastructure sector is now ready to stage a sustained positive price trend. Investors are renewing interest in these sectors. Now is the time to buy into these companies for attractive current yields, dividend growth and price appreciation.

Energy infrastructure (also called energy midstream) companies provide the assets and services which move energy commodities (crude oil, natural gas, refined products and natural gas liquids, also referred to as NGLs) from the production areas to the end users. The assets in the sector include pipelines, storage facilities, processing facilities, and all kinds of terminals. Here are some of the current events that point to higher midstream values as we move further through 2018.

The rise in the price of crude oil has increased investor interest in the overall energy sector. The crude price increase has come even as U.S. crude oil production has continued to climb. The production growth in the Permian oil play is well covered, and higher oil prices will result in more drilling in other production areas. Coverage of the energy sector by the financial news outlets is growing.

A recent Wall Street Journal article Is the U.S. Shale Boom Hitting a Bottleneck, highlighted the need for even more pipelines to move crude oil and natural gas out of the Permian.

Over the last two years, the midstream energy companies were forced to rethink their financial structures and how they managed their balance sheets. There have been distribution rate reductions, but most of those are now history. At this point the payouts from the larger companies are secure and investors can look forward to future dividend growth. Current yields are very attractive.

Companies will be releasing first quarter earnings reports over the next few weeks. I expect most of the reports to exceed Wall Street analyst forecasts, which will allow the recent upward price trend to continue.

Prior to 2015, the master limited partnership (MLP) was the prevailing business structure for energy midstream companies. Through the energy sector bear market, several companies have changed structures. Now the sector is close to a balanced mix of MLPs and corporations. At the present time, the higher yields come from the MLPs. This means these companies have more upside price potential has yields between them and the corporate shares become similar for companies with comparable business results. Most MLPs report tax information on what’s called a Schedule K-1. For my Dividend Hunter subscribers, I search out Form 1099 reporting energy infrastructure investments.

Related: 9 High-Yield MLP Funds Without the Tax Hassles

Here are three midstream companies with high current yields, continuing dividend growth, and strong business prospects.

Enterprise Products Partners LP (NYSE: EPD) with a $57 billion market cap is the largest midstream MLP. The company provides the full range of energy infrastructure services. EPD is one of the biggest pipeline service providers to transport crude oil from the Permian to the Texas Gulf Coast. It recently announced that its 416-mile Midland-to-Sealy pipeline is now in full service with an expanded capacity of 540,000 barrels per day (BPD) and capable of transporting batched grades of crude oil.

This company also stands out from the MLP pack by using internally generated cash flow to pay for growth projects. In an era of high equity unit yields, this is a significant advantage.

EPD yields 6.4% and is growing distributions by 2.5% per year.

Magellan Midstream Partners LP (NYSE: MMP) primarily owns and operates refined products (gasoline, diesel fuel, jet fuel, etc.) pipelines and storage terminals. The company also owns 2,200 miles of interstate crude oil pipelines. The company provides service to almost 50% of the U.S. refining capacity.

With its $15 billion market cap, Magellan is one of the more stable large MLPs. This is another of a very small number of midstream energy companies that funds growth capital from internal cash flow.

Since its 2001 IPO, this MLP has consistently grown the distributions paid to investors. Over that period, the payouts have grown at a 12% compounding rate. Currently the company forecasts 5% to 8% distribution growth through 2020. MMP currently yields 5.6%.

Related: Big Oil Bets Big on Big Data to Increase Revenues and Cut Costs

CNX Midstream Partners LP (NYSE: CNXM) owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin in Pennsylvania and West Virginia. This MLP primarily provides gathering and processing services to CNX Resources Corp (NYSE: CNX), which is also the sponsor and holds the MLP’s general partner interests.

CNXM provides support to the production growth planned and executed by CNX. This $1.1 billion market cap MLP is very separated from much of the drama that has driven MLP values.

At its recent analyst and Investor Day the company affirmed its guidance for 15% distribution growth through 2022. The current yield is 6.9%.

Eric Ervin was making his rich client so much money that he suggested: “Hey, why don’t you just quit your job?”

The investor saw the opportunity to scale Eric’s “secret strategy” – and he wanted to help invest!

Both guys knew the power of dividend growth investing. But Eric’s second-level insight is what made them both a boatload of cash. He figured out a way to bet purely on the higher payouts – as close to a “sure thing” as you’ll ever see in stocks. Here’s what I mean.

Blue chip stocks tend to raise their dividend every year. Even if it’s a token increase, it keeps shareholders happy. Betting on S&P 500 dividend growth is steadier and better than wagering on price appreciation itself:

S&P 500 Dividend Growth (Blue) vs. Price (Gray)

Problem is, traditionally there’s been no way to bet on the blue line above. You’d have to buy the index and hope its price appreciates in tandem. Not as compelling a bet.

Well Eric figured out that he could buy “swaps” on S&P 500 dividend growth itself. He banks the steady upside for his Reality Shares DIVS ETF (DIVY) – which has methodically grinded higher year-to-date, unbothered by the drama in the broader markets:

Stocks Up? Down? DIVY Don’t Care

The genius of DIVY is that it capitalizes on the underappreciated annual tradition of dividend raises. For 42 of the last 45 years, S&P 500 companies have increased their dividends at large. And the swaps that Eric buys tend to be perennially underpriced – resulting in incredibly steady gains that track payout growth rather than price action.

Eric’s Newest ETF

Since launching DIVY, Eric and his team created a five-tier rating system called DIVCON that provides a snapshot of dividend health for individual companies. It combines and weights seven factors (such as cash flow, earnings growth, and shareholder payouts) to provide a comprehensive snapshot of a company’s dividend health.

DIVCON 5 is the best bucket. It means the dividend is in good shape, and there’s a 97.6% likelihood that it’ll be increased in the next year.

DIVCON 1 is the danger zone. It means the dividend is more likely to be cut than increased in the next 12 months.

Over the past 15 years, investors who would have traded off DIVCON ratings – buying the fives, and selling or shorting the ones, would have done quite well:

DIVCON’s Dividend Prescience

By now you probably know that higher payouts drive stock prices up in tandem. It’s why dividend growers have returned 10% per year for the past three decades, outpacing static dividend payers, dividend cutters and non-payers (according to Ned Davis).

But we can’t look in the rearview mirror to predict future dividend growth and stock returns. We need a leading indicator – like DIVCON.

And Eric is making outperformance easy for us individual investors. His Reality Shares DIVCON Leaders Dividend ETF (LEAD) buys DIVCON’s top 50 stocks and holds them for a year. Many of them boast dividend charts like these beautiful staircases:

Stairway to Payout Heaven

Everyone loves dividends, but dividend hikes are often underappreciated. Not only do they increase the yield on your initial capital, but they often are reflected in a price increase for the stock.

For example, if a stock pays a 3% current yield and then hikes its payout by 10%, it’s unlikely that its stock price will stagnate for long. Investors will see the new 3.3% yield, and buy more shares. They’ll drive the price up, and the yield back down – eventually towards 3%. This is why your favorite dividend aristocrat never pays a high current yield – its stock price rises too fast!

LEAD is a convenient way to get exposure to stocks that are “at-risk” of rapid share price appreciation. With DIVCON looking ahead, you can use this fund to create a diversified portfolio of the 50 blue chip stocks most likely to raise their dividends over the next 12 months.

The Sweet Spot: 8% Yields With Dividend Growth

But what if you need big dividend income today so that you can retire comfortably? After all, 2% or 3% just won’t cut it unless you’re rich already!

You can retire on as little as $500,000 today by focusing on stealth income plays such as closed-end funds, preferred shares and real estate investment trusts (REITs). In many cases, these issues pay secure yields of 8% or better – with dividend growth to boot!

This means you are assuring yourself of 10%+ annual returns, with most of that coming as cash dividends. These vehicles are safe, but they aren’t as well known as the usually-expensive dividend aristocrats. And that’s a good thing for us, because we can lock up secure income streams of 8% or more while enjoying payout growth and price upside to boot.

Editor's Note: The stock market is way up – and that’s terrible news for us dividend investors. Yields haven’t been this low in decades! But there are still plenty of great opportunities to secure meaningful income if you know where to look. Brett Owens' latest report reveals how you can easily (and safely) rake in 8%+ dividends and never worry about drawing down your capital again. Click here for full details!

Source: Contrarian Outlook 

Have you ever looked at a stock chart that has moved up over a period of years and wish you could have bought shares way back when and participated in those gains?

Typically, individual investors don’t become aware of an attractive income stock growth opportunity until years after the IPO and the early investors have reaped the big gains. Many investors find new investment opportunities when they see reports on individual stocks on the financial websites. Without coverage a stock can stay invisible to most investors. Here is one such stock that has very attractive income plus growth potential.

MGM Growth Properties LLC (NYSE: MGP) is a real estate investment trust that came to market in April 2016. As the name indicates, the new REIT was spun-off by hotel and gaming company MGM Resorts International (NYSE: MGM). At the IPO, MGM Growth Properties received title to seven properties on the Las Vegas Strip:

1. Mandalay Bay
2. The Mirage
3. Monte Carlo
4. New York-New York
5. Luxor
6. Excalibur
7. The Park, a dining and entertainment complex located between New York-New York and Monte Carlo.

The Las Vegas properties represent about 24% of total rooms on the Strip and approximately 35% of the privately-owned convention and meeting spaces on the Strip. The properties feature over 100 retail outlets, over 200 food and beverage outlets, and approximately 20 entertainment venues.

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, bringing the current portfolio total to 12.

All properties are being leased by subsidiaries of MGM under a single, triple-net Master Lease. Under the terms of the Master Lease, MGM paid MGP a starting annual rent of $550 million per year. The rent consists of a Base Rent of $495 million and $55 million of Percentage Rent. 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 Master Lease states that any extension of its term must apply to all the properties under the Master Lease at the time of the extension. 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. MGM has agreed to provide MGP and its subsidiaries with financial, administrative and operational support services. Costs of these services will be reimbursed back to MGM.

Related: 5 REITs with a Long History of Double Digit Dividend Increases

MGP’s rental income is now projected to be $757 million in 2018, up 38% from the amount at the time of the IPO. The MGP dividend has been increased twice and is now up 10% from the dividend projected in the IPO prospectus. With a pair of recently announced acquisitions, it looks like investors already have a built-in dividend increase or two for 2018. Just last week, on April 5, MGP announced its first outside the MGM family acquisition, with the $1.0 billion purchase of the Hard Rock Rocksino in Northfield Park, Ohio. The operating assets of the casino will be sold and as a REIT, MGP will retain the casino property. MGM is committed to using the REIT as a growth vehicle. With the combination of the master lease, which gives a high level of confidence that MGP will generate cash flow to support the dividend, and the early move into acquisitions to generate growth, I forecast MGP to be a high single digit dividend growth REIT for years to come. Add a 6.4% current yield to that growth and you have an attractive total return stocks.

While most income investors are reaching for big yields right now, a small group of “hidden yield” stocks are quietly handing smart investors growing income streams plus annual returns of 12%, 27.1% and even 54% or more per year.

So if you want to double your money every few years – and double your income as well – then you need to focus on the seven stocks I’m about to share.

(All seven are about to hike their dividends. Yet the “forward-looking market” hasn’t yet priced in these payout raises. This is free money the market is giving us, thanks to the most “underrated” shareholder return vehicle.)

The Most Lucrative Way Shareholders Get Paid

There are three – and only three – ways a company’s stock can pay us:

1. A cash dividend.
2. A dividend hike.
3. By repurchasing its own shares.

Everyone loves the dividend, but investors usually don’t give enough love to the dividend hike. Not only do these raises increase the yield on your initial capital, but also they often are reflected in a price increase for the stock.

For example, if a stock pays a 3% current yield and then hikes its payout by 10%, it’s unlikely that its stock price will stagnate for long. Investors will see the new 3.3% yield, and buy more shares.

They’ll drive the price up, and the yield back down – eventually towards 3%. This is why your favorite dividend “aristocrat” – a company everyone knows and has paid dividends forever – never pays a high current yield. Its stock price rises too fast!

For example let’s look at Verizon (VZ), it pays a generous dividend – but doesn’t raise it meaningfully. This lack of payout upside caps the stock’s price upside.

Frustrated Verizon investors need not look further than this chart for an illustration of why their money is underperforming:

Verizon’s Sleepy Dividend Slows the Stock

Verizon’s stock and dividend have increased by roughly the same amount. That’s no coincidence – it happens all the time.

You’ll also notice that the firm’s track record of “yearly dividend raises” means little because the raises themselves weren’t meaningful.

This a common mistake dividend aristocrat fans make when they flock to track records. They’re not that far off the scent of 100%+ gains, however. They just need to look ahead, rather than behind. Let me explain.

The Path to Fast 162% Gains From Safe Blue Chips

Have you always wanted to buy a safe blue chip stock like Coca-Cola (KO) and get rich from it like Warren Buffett?

It’s doable. But most investors “live in the past” and fixate on dividend track records rather than a payout’s forward prospects. And looking ahead is the key to yearly gains of 12%, 27.1% or even 54% or more with blue chip stocks.

Let’s first consider the case of Coke, which achieved its dividend royalty status in 1987 (its 25th straight year with a dividend hike). The firm hit its coronation with a head of steam, rewarding investors with a 362% payout hike in just five years (from 1986 to 1991). Its stock price raced to keep up with its dividend, rising 234% over the same time period:

Great Dividend Growth, Great Returns

It didn’t really matter if you bought shares before or after the company was officially a dividend aristocrat. The driving factor for profits was the dividend’s velocity – it was moving higher quickly, so its stock price followed.

Fast forward to the last five years, and we see that Coke’s youthful exuberance has slowed considerably. The firm still hikes its payout every year, but it’s a slower climb – totaling 45% over the past five years. Which means its stock price merely plods along too (+25% in five years):

Average Dividend Growth, Average Returns

If you’re looking for great dividend growth in 2018, you should focus on these seven firms about to raise their payouts.

Tiffany & Co. (TIF)
Dividend Yield: 2.1%

Luxury goods company Tiffany & Co. (TIF), like many other retail stocks, is struggling to find any positive momentum whatsoever in 2018. The stock is off more than 9% through the first few months of the year – far worse than the broader market’s 1.9% declines.

That said, it’s not all thorns for Tiffany.

Just a few months ago, the company reported a solid holiday-season quarter that included a 5% jump in comparable-store sales and an 8% improvement in the top line, largely bolstered by impressive performances from the Asia-Pacific region and Europe. That led Tiffany to upgrade its own outlook for the fiscal year’s profits.

Sometime near the end of May, shareholders should be on the receiving end of another dividend hike. Tiffany has upgraded its payout by nearly 50% over the past five years, and is likely to tack on an additional bump during the last week of the month.

Phillips 66 (PSX)
Dividend Yield: 2.9%

Phillips 66 (PSX) is a welcome breath of fresh air in the energy space. That’s because while many energy stocks were slowing dividend growth down to a trickle during the oil-price collapse starting in summer 2014 – or even cutting payouts – Phillips 66 has kept the income pipeline flowing.

Namely, since 2014, this refiner and midstream company has juiced its dividend by nearly 80%, including a substantial 11% hike last year.

PSX should have plenty of ammunition for another dividend increase come early May, when it typically makes an announcement. That’s because the company reported yet another excellent quarter a couple months ago that beat the pants off analyst estimates – profits of $1.07 per share were well ahead of the consensus estimate of 86 cents.

But the spending won’t end there. Phillips 66 also plans to spend $500 million more on capital expenditures in 2018 than it did in 2017, which should fuel growth over the coming years.

Southside Bancshares (SBSI)
Dividend Yield: 3.2%

While the run-up in banks has left yields in the financial space awfully dry, Southside Bancshares (SBSI) offers a respectable yield of above 3%. That’s in some part thanks to an aggressive dividend policy that has seen the company raise payouts multiple times a year over the past few years.

Southside, by the way, is the bank holding company behind Texas community bank Southside Bank, which controls about $6.5 billion in assets across 60 branches within the state. There’s nothing out of the ordinary about this bank – it provides typical services such as mortgages, personal loans, and checking and savings accounts.

What is unusual about SBSI is its dividend program, which has featured varying numbers of increases across the past few years. But one thing that’s pretty consistent is the company announcing a dividend hike sometime in mid-May.

Leggett & Platt (LEG)
Dividend Yield: 3.2%

What would a list of potential dividend increases be without a Dividend Aristocrat?

Leggett & Platt is one of the more diversified manufacturers out there, producing a swath of products used in businesses, in homes and even in transit. Just a few examples? Its residential products include bedding, carpet cushions and furniture fasteners; its industrial products include various types of wires and sterling steel rods; and it even boasts an aerospace division that includes tubes and ducts.

That diversification has allowed Leggett to build a 47-year history of interrupted dividend increases, and No. 48 should be on the way in May. The company typically makes an announcement during the middle of the month.

Agree Realty (ADC)
Dividend Yield: 4.2%

Agree Realty (ADC) is a net-lease retail real estate investment trust that owns 458 assets in 43 states, making up about 8.8 million square feet of gross leasable space. Tenants include the likes of Walgreens (WBA), McDonald’s (MCD) and JPMorgan Chase (JPM).

It’s also a dedicated dividend raiser. Agree Realty has actually doled out a pair of dividend increases in each of the past couple years, and if history repeats itself, the company should be due for another dividend hike sometime in May.

Of course, the question is “when”? The company’s declaration dates have been all over the place – sometimes at the end of the month, sometimes at the beginning, and it has even stretched the announcement out into June before.

Stag Industrial (STAG)
Dividend Yield: 5.9%

Stag Industrial (STAG) is a highly respected monthly dividend stock that plays in the single-tenant industrial real estate space. That includes warehouse, distribution and light manufacturing facilities.

At the moment, the portfolio includes 356 buildings in 37 states, spread across numerous industries, including automotive, air freight, containers & packaging, food & beverages and business services, among others. The tenant list is diverse, too, and spread out – the largest tenant (the U.S. General Services Administration) makes up just 2.6% of ABR. Other tenants include XPO Logistics (XPO), Deckers Outdoor (DECK) and Solo Cup.

While Stag’s dividend increases tend not to take effect until the dividend paid out in August, it tends to announce said increase sometime in the first week of May. The company typically hikes its payout twice a year, though it did keep it to “just”  one increase in 2016.

Spectra Energy Partners (SEP)
Dividend Yield: 8.7%

Spectra Energy Partners (SEP) is one of the largest energy master limited partnerships (MLPs) in the country, boasting more than 15,000 miles of transmission pipelines, 170 billion cubic feet of nat-gas storage and about 5.6 million barrels of crude oil storage, according to its own most recent data.

Spectra also is one of the more prolific payout raisers in energy.

The company has raised its distribution by about 50% over the past five years, which is plenty respectable. But Spectra has done it in style, announcing its 41st consecutive quarterly increase to its distribution in February.

No. 42 is likely coming sometime in the first week of the month.

Michael Foster has just uncovered 4 funds that tick off ALL his boxes for the perfect investment: a 7.4% average payout, steady dividend growth and 20%+ price upside. — but that won’t last long! Grab a piece of the action now, before the market comes to its senses. CLICK HERE and he’ll tell you all about his top 4 high-yield picks.

Source: Contrarian Outlook 

Last year at the Berkshire Hathaway annual shareholder meeting, billionaire Warren Buffett stated: “We have got a big appetite for wind or solar.” This high-yield stock is a pure play wind and solar energy producer that was just upgraded by Goldman Sachs. View the recent share price decline as an opportunity to invest in the renewable energy sector at a great buy-in price.

Pattern Energy Group (Nasdaq: PEGI) is an owner/operator of 20 wind power facilities, including one project it has agreed to acquire, with a total owned interest of 2,736 MW in the United States, Canada and Chile. Each power facility is contracted to sell all its energy output, or a majority, on a long-term, fixed-price power sale agreement. Ninety-two percent of the electricity to be generated by the facilities will be sold under these power sale agreements, which have a weighted average remaining contract life of approximately 14 years.

The company has been focused on growing its portfolio since the 2013 IPO. At that time the company owned 1,041 MW of energy production capacity. The added and future acquisitions for Pattern Energy Group are sourced and developed by a related private investment company called Pattern Development. Pattern Development is more like an investment fund that searches out renewable energy production projects to fund. Management has a stated goal of reaching 5,000 MW of owned capacity by 2020. At this time the company already has over 1,000 MW of new projects where PEGI has the right of first offer to purchase the projects when they are ready to come on line. In its long-term development pipeline, management claims visibility on up to 10,000 MW.

Related: Sell This Popular High-Yield Clean Energy Stock ASAP

Investors have participated in the growth, with the PEGI dividend increasing every quarter until the most recent announcement. From 2014 through the end of 2017 the dividend grew by 35%. On March 1, 2018 the company chose for the first time to not increase the dividend. It was kept level with the previous rate. While the market did not like the lack of dividend increase, it was a prudent move by the Board of Directors to not announce an increase. Cash flow from recent acquisitions had not kicked in to boost free cash flow to pay a higher dividend. In February the company announced the purchase of a 206 MW portfolio of wind and solar projects in Japan. The portfolio has three operating facilities and two under construction. It is an almost certainty that PEGI will soon resume dividend growth.

The PEGI share price peaked above $24 in September 2017. The shares now trade at $17 and change with a 9.75% current yield. This is a dividend growth stock, in the growing renewable energy sector. The current sell-off of the stock is not justified by fundamentals. When the dividend again starts to grow this stock could be bid up again into the mid-$20’s.

What is likely the best performing high-yield stock just went ex-dividend. I recommend adding to big dividend stock positions after the ex-dividend dates, to usually pick up shares at a cheaper price. While I highly encourage income-focused investors to make sure they diversify into at least 20 dividend stocks, there is one that is a must-own, 11% yielding REIT that is also growing its dividend payments.

New Residential Investment Corp. (NYSE: NRZ) is a finance REIT that invests in products that are on the financial fringe of the residential mortgage industry. The largest investment is in mortgage servicing rights –MSRs. These are the contractual fees the mortgage servicing company receives out of the interest paid on a home mortgage. MSRs are typically 25 basis points (0.25%) per year. The cost to service a mortgage is typically less than 10 bp. The rest is profit to the company that owns the MSRs. New Residential owns full or excess MSRs on over half a trillion dollars of unpaid mortgage balances. 25 basis points of that much loan balance is a lot of cash flow!

Recently NRZ has been buying up call rights on non-agency mortgage backed securities. Currently the company owns rights on $145 billion of unpaid balance MBS. This is 30% of the entire non-agency MBS market. New Residential executes what it calls “clean up” calls on the MBS, repackaging the loans into new securities. It is a profitable business.

The company owns a portfolio of opportunistic residential mortgage and consumer loan portfolios. New Residential has been very successful at finding opportunities for great returns from loan portfolios that don’t fit into the needs of traditional buyers of these products. For example, the company has earned an 89% annual internal rate of return on a portfolio of consumer loans purchased in 2013. Target returns are 15% to 20%, and the results have often exceeded the targets.

In 2017, NRZ became an approved mortgage servicing company in all 50 states. On November 29, 2017, New Residential announced definitive agreements to acquire Shellpoint, a non-bank mortgage originator and servicer. These moves allow the company to keep MSR servicing internal or contract it out, depending on what makes the most sense financially and profitably.

As an investment, NRZ has been a great dividend paying stock. Over the last three-and-a-half years, the quarterly payout has grown from $0.35 per share to the current $0.50 per share. Last year the dividend was increased twice, and the stock produced a 27% total return. For the 2017 fourth quarter, the company reported core earnings of $0.61 per share. This was the third consecutive with earnings above $0.60 and it has been three quarters since the last dividend boost. Each quarter of outstanding earnings makes the next increase more likely.

The danger for New Residential, and the likely reason why it yields over 11%, is that all the different investments in the portfolio are depleting assets. Mortgages get paid down or off. Clean up call transactions are one-time events. This means that the management and investment team must find a continuous stream of investment opportunities that will generate the company’s target 15% to 18% returns on equity. This requires a high level of expertise. So far in its five years as a public company, NRZ has surpassed all expectations and continues to do so. Investors do need to be aware that the company needs to be monitored to make sure it keeps the pipeline of investments full.

The Fed funds rate is 0.25% higher now than it was this time last week. What does this mean for our income investments – especially our monthly dividend payers?

We’ll explore in a minute. First, let’s allow ourselves a moment to appreciate the attractiveness of meaningful monthly distributions.

Our bills arrive every 30 days. But most stocks only pay their dividends every 90. So why don’t we bridge the gap and line up our income with our expenses?

Electricity bill? No problem – got an emerging market bond distribution to cover that.

Cable? No hurry to cut the cord (and risk live sports) when we have a REIT stock that covers this month’s bill.

As I’ve written before, my 8 favorite monthly dividend payers combine to pay $3,333 every single month on a $500,000 portfolio. (From an average 8% yield, paid every 30 days.) And this is all pure dividend gravy – money we can spend without having to tap our capital.

But before we rush to our favorite stock screener and start plugging in “monthly payouts”, let’s be mindful of rising rates. Some every-30-day-payers are particularly good buys, but others should be avoided.

Two More Hikes Likely

We can’t always take the Federal Reserve’s comments at face value, but traders today are handicapping Fed Chair Jerome Powell at his word. The smart money is betting that Jerome & Co. hike twice more in 2018:

Current Bets: 2 More Hikes 

A 0.50% move doesn’t sound huge, but it’s big enough to bother regular vanilla bonds – and their proxies – when we’ve been living in a no-yield world. In fact, this has already happened to the most well-known monthly payer.

Stay Away (Still): O No

Realty Income (O) was the first firm to stake its claim as “the monthly dividend company.” In fact, it trademarked the phrase! And Realty Income has been a fantastic investment through the years. But there’s a problem with popularity – low yields:

The Bear Market in O’s Yield

The bright spot for income investors? The Big O is down 21% since I warned readers to avoid it. This price decline has been good for the stock’s yield, which is now above 5%:

It Was a Good Time to Avoid O

Five percent remains respectable today. It puts the stock’s payout on a perch just above the safest fixed income investments (like Treasuries).

But is 5%+ enough compensation given that O’s property holding are shakier than ever? I’m not sure. As a retail landlord, it’s a crapshoot every month as to which rents are going to get paid – and which tenants will succumb to “Death by Amazon.”

Instead of gambling on O, I’d prefer to bet on surer things – like bonds that will actually rise in value as rates continue to climb.

Buy Instead: Safe Floating Rate Bonds

Instead of investing in dicey retail strip malls, I prefer corporate debt. After all, the Fed is raising rates because the economy is rolling. That’s good for corporations’ balance sheets and their ability to repay their loans.

We need to pick the right companies, of course, to make sure you get paid back.  One monthly payer on the corporate side is the Market Vectors Investment Grade Floating Rate ETF (FLTR). This fund buys floating rate notes from businesses that are rated as investment grade by Moody’s, S&P, or Fitch.

So far, so good. Unfortunately it currently pays a paltry 1.9%:

FLTR: Slightly Better Than Your Mattress

And FLTR has delivered a total return to investors of just 9% since inception (nearly seven years ago). Yikes.

The best deals in the corporate bond market are actually just below the somewhat arbitrary investment grade cutoff. It’s where contrarian fund managers and investors like us capitalize on the fact that any pension funds, banks, and insurance companies are not allowed to invest in these “low quality” issues per their by-laws.

The result is a sweet spot of value, thanks to the lack of big money chasing these types of bonds.

Agencies’ ratings shortchange a lot of very good debt. You just have to pick and choose the quality companies with plenty of cash flow to service their debt obligations. Or those with enough assets to make their creditors whole no matter what happens.

My preferred way to invest in this market is with my favorite floating-rate bond fund that today pays 5.1% yearly (and has double-digit price upside potential, too.)

With a single-click of our mouse (or tap of our phone), we can hire the best (and most well connected) bond managers on the planet to build a portfolio for us. And we can even get them to work for us for free if we buy the fund today!

This ultimate rate-proof bond fund also pays a monthly dividend (again, good for 5.1% annually). And it delivers total returns between 10% and 15% yearly when the Fed is raising interest rates (as it is right now).

It’s one of 12 monthly payers in my “8% Monthly Payer Portfolio”. With just $500,000 invested, it’ll hand you a rock-solid $40,000-a-year income stream. That’s an 8% dividend yield … and it’s easily enough for most folks to retire on.

The best part is you won’t have to go back to “lumpy” quarterly payouts to do it! Of the 19 income studs in this unique portfolio, 12 pay dividends monthly, so you can look forward to the steady drip of $3,333 in income, month in and month out—give or take a couple hundred bucks – on every $500K in capital you’re able to invest.

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 

Today I’m going to show you 4 funds that, when put together, give you a juicy 7.2% dividend yield.

And that’s just the start. In addition to giving you $595 per month in income for every $100,000 invested, this “instant” 4-fund portfolio gives you diversification that limits your risk of losing cash in a market downturn.

Oh, and there is capital gains upside here for you, too.

The reason for that upside is that all of these funds are trading at a pretty big discount to their net asset value (NAV).

Let me explain.

Each of these picks is a “closed-end fund,” a unique type of fund that has a few key advantages over more familiar mutual funds and exchange-traded funds. A big one is that CEFs can—and very often do—trade on the market at a price that is below the actual market price of all of the assets inside the CEF.

How is this possible?

It boils down to this: CEFs set how many shares are in the fund when they do an initial public offering and don’t release new shares in the future. That weird mechanism means funds will often trade for less than their NAV—and those discounts can be really big.

Which brings me to…

“Instant Portfolio” Pick #1: A Real Estate Titan With a 7.9% Dividend

Every real estate developer, landlord and house flipper’s dream is to get their hands on a property that’s selling for 17% below its actual market value. But those deals are hard to come by.

In CEF land, however, they’re easy to get.

All you need to do is buy shares in the RMR Real Estate Income Fund (RIF), a CEF that’s been around since 2005 and not only survived the bursting of the 2008–09 real estate bubble but has also been paying out massive dividend checks ever since.

And right now, RIF is paying out a 7.9% yield.

The fund’s portfolio makes this possible. RIF owns shares in some of the largest real estate investment trusts (REITs) in the world—basically companies whose sole purpose is to buy, manage and rent out real estate.

And since RIF’s portfolio is diversified across 125 REITs, shareholders are getting a slice of literally thousands of properties in all kinds of sectors: retail outlets, assisted-living facilities, offices and even data centers for cloud-computing companies.

And here’s why you want to buy now:

A Big Sale Ending Soon

Notice how the fund’s discount to its NAV has gone off a cliff in recent years—but it’s starting to recover? The current 16.7% discount is a bargain that may end soon thanks to a pile-in back into CEFs. That makes this one a fund to consider now—because buying at this point could set you up for 25% capital gains while this fund’s discount disappears.

“Instant Portfolio” Pick #2: Peace of Mind and a Tax-Free 5.7% Payout

The Nuveen Quality Municipal Income Fund (NAD) is not only a great option because of its 5.7% dividend yield but also because of the diversification and low volatility it provides.

Let me explain by comparing this fund to the S&P 500, which we will do with the benchmark SPDR S&P 500 ETF (SPY). In 2017, the stock market famously saw extremely low volatility, steady gains and little fear, which resulted in stocks climbing up and up, with few corrections.

Then 2018 happened.

Fear Is Back!

The orange line here represents volatility in price changes over the last month for SPY, and you can see how the line fell sharply and stayed low throughout 2017.

But this is an aberration. Big spikes, like we saw in 2015 and 2016, are the norm—moments when the market goes into a panic and starts selling shares. The blue line, however, represents the volatility we saw with NAD, a fund with bonds from as diverse places as Utah and New York.

Although the fund’s price swings did accelerate a bit in late 2016, after Donald Trump was elected president (and the market worried about how his tax plans would affect municipal bonds), the blue line stays pretty quiet all the time.

There’s a reason for this: municipal bond values do not go up and down a lot. That means buying NAD gets you steady income without big paper losses when the market freaks out.

That’s why you need to diversify your portfolio so you aren’t forced to sell when the market collapses. With NAD, you can hedge against a market downturn by diversifying beyond stocks and into these low-volatility, high-quality municipal bonds.

And if you’re worried about missing out on gains, don’t be. Here are NAD’s total returns over the last decade:

Strong Gains in a Safe Haven

A 6.8% average annual return from a fund with such low risk shouldn’t be possible. But here it is.

“Instant Portfolio” Pick #3: A 7.1% Dividend From Top-Quality Stocks

Of course, we still need stocks in our portfolio so we can profit from the good times in the stock market—and I see many of those still to come. As I wrote in a March 8 article, stocks are set for a good year, thanks to rising earnings and a better economic environment, and we want to be part of that.

That’s why you should take a serious look at the AGIC Equity and Convertible Income Fund (NIE).

Not only does NIE pay a 7.1% dividend, but it also has an enviable portfolio full of winners, such as Amazon.com (AMZN), Microsoft (MSFT), Alphabet (GOOGL) and Visa (V). NIE is able to turn big gains from these stocks into steady income for shareholders. That’s why the fund has been able to deliver this massive 9.8% average annualized return over the last decade:

Strong and Steady Returns

The fund also makes its dividend safer with convertible bonds. Let me explain.

In addition to shares in the best companies in the world, NIE also buys and trades a group of unique bonds that smaller and riskier companies issue. These “convertible bonds” are a kind of debt with a special agreement that, if the company’s stock rises to a certain level, the bonds will turn into common stock.

NIE buys these convertibles because it gets them a reliable income stream from these companies and the potential upside of owning actual shares in the firm. The fund has a long track record of using these to secure its dividend and provide more capital gains upside for shareholders.

And despite its amazing track record, NIE is selling at a 10.4% discount! That’s why it’s time to buy now.

“Instant Portfolio” Pick #4: A Rock-Steady Corporate-Bond CEF With a 7.3% Dividend

Speaking of bonds, we should also add some corporate bonds to our “instant” portfolio. Not only can we get a 7.3% dividend by doing this with the Western Asset High Yield Defined Opportunity Fund (HYI), but we can also dip our toes in this asset class at a massive 10.2% discount.

And now is clearly the time for HYI to shine.

That’s because the market has turned its back on this fund for too long, despite the recent improvements management has made. Specifically, HYI has focused more on companies that are on the cusp of getting credit upgrades that will raise the value of their bonds. Just take a look at how its discount to NAV has trended over the last few years:

The Discounts Just Get Bigger

The market has sold off HYI in a big way, sending it from an 8% premium to NAV to an 11.2% discount.

And there was a good reason for that back in the mid-2010’s: HYI was not doing well. Its total return was about 17.5% from mid-2010 to 2014, which isn’t great and definitely lagged the S&P 500 over the same period (SPY rose 65% during that same timeframe).

But that’s been changing. Take a look at this chart.

Gains Accelerating for HYI

HYI is up 25% from the beginning of 2016, and its strong gains are just getting started. Why? Because, again, the economy is improving—which means the credit quality of the bonds HYI holds is starting to go up. That increases demand for them, resulting in higher prices on the market and profits for HYI shareholders.

Exposed: The “Billionaires Only” 7.6%+ Dividends You Can Buy NOW

Here’s something else you may not know about CEFs: some of the world’s richest billionaires have been quietly cashing in on them for years.

I’m talking about financial titans like Bill Gates, Bill Ackman and Jeffrey Gundlach, the legendary “Bond God.”

Then there’s Boaz Weinstein, who made a fortune betting against the ridiculous trades of JPMorgan’s so-called “London Whale” back in 2012.

In 2017, Weinstein dropped a cool billion into—you guessed it—CEFs.

Here’s what he had to say about the big profits waiting to be made from these funds:

“You go into it hoping the discount will narrow on its own, but one of the nicest points about this investment is that while you wait, you earn an above-average yield, given the discounted price.”

He also called CEFs “a rare corner of the market where retail investors can get an edge over institutions.”

I couldn’t have said it better myself!

And now is your chance to grab your share of the profits from this exclusive corner of the market.

The 4 CEFs I just told you about are a great start. But right now I’m pounding the table on 4 OTHER funds throwing off fatter average dividends—7.6% as I write—and one of these unsung cash machines even pays an amazing (and growing!) 8.1%.

Better yet, all 4 trade at even more outrageous discounts to NAV, putting you well on your way to 20%+ GAINS in the next 12 months! Throw in that 7.6% average dividend and you’re looking at a fast 28%+ gain here—with a big chunk of that in CASH!

Returns like these are common in the CEF space. No wonder billionaires like Weinstein, Gates and others have silently flocked to them.

Your opportunity to join this “billionaire’s club” through the 4 very best funds in the space is open now. But the weird discounts on these stout 7.6%+ payers are already starting to slam shut, so you need to make your move!

Michael Foster has just uncovered 4 funds that tick off ALL his boxes for the perfect investment: a 7.4% average payout, steady dividend growth and 20%+ price upside. — but that won’t last long! Grab a piece of the action now, before the market comes to its senses. CLICK HERE and he’ll tell you all about his top 4 high-yield picks.

Source: Contrarian Outlook

If you’re planning to retire (or are currently retired), I urge you to become intimately familiar with monthly dividend stocks. They offer the ultimate consideration: income payments that actually line up with your monthly bills.

Today, I’m going to help get you started by introducing you to four monthly dividend payers that yield up to 12%. But first: What’s so great about this type of stock?

When you pay your bills – be it the mortgage, the electricity, the TV – you don’t sit down at the kitchen table to do that every quarter. You do it every single month. But most dividend stocks don’t keep the same kind of schedule. American stocks typically pay shareholders once every three months.

Monthly dividend stocks, however, help you to tackle regular expenses without worrying about fluctuations in payouts depending on timing. And these every-30-day payers also have a couple of additional benefits, too:

• It’s a sign of stability: Promising a dividend check every single month is a bold promise that a company wouldn’t make if it wasn’t serious about keeping (and even raising) the payout.
• Faster gains. Even if you have 20 or 30 years left to retirement, a monthly payout can be put back to work more quickly than a quarterly one. A monthly payer, in fact, can generate thousands of dollars more in additional returns via reinvested dividends over the course of a couple decades than a quarterly payer with the same yield.

Are all monthly dividend stocks perfect? Far from it. Today, I’m going to show you four payers yielding between 4% and 12%. Two should make your wish list, while two are proof that even monthly dividends aren’t always perfect.

LTC Properties (LTC)
Dividend Yield: 5.8%

LTC Properties (LTC) is one of the more interesting plays in the real estate investment trust space, combining health care and retirement properties in a way that’s tailor-made to capture the potential of the aging Baby Boomers.

Specifically, LTC Properties has a total of 208 properties across 29 states that includes 105 assisted living facilities and 96 skilled nursing facilities, with the remaining seven properties classified as simply “other.”

The company’s fourth-quarter and full-year earnings report didn’t exactly include screamingly positive results. Q4 funds from operations declined by a penny per share from the year-ago period to 77 cents per share, though for the whole year, FFO improved from $3.06 per share in 2016 too $3.10 per share in 2017.

Still, shares have hemorrhaged more than 25% since July of last year, with some of that coming amid the malaise of the broader REIT space. That has LTC selling at less than 13 times FFO, and yielding nearly 6%.

That should give investors plenty to think about, especially when you consider that LTC’s properties naturally benefit immensely from the aging of America’s Boomers, and have the added bonus of being located in areas that have high demand for senior health care services. Also appealing is a low debt burden of around 30% of its market capitalization, as well as a dividend that represents less than 75% of FFO.

Wall Street sometimes lets momentum get the best of it, and that appears to be the case in LTC Properties. This REIT is positioned for growth yet value-priced – and a substantial monthly dividend only makes it look that much better.

Global Net Lease (GNL)
Dividend Yield: 12.6%

At first blush, Global Net Lease (GNL) looks like a prime opportunity.

You can’t ask for more diversification than what GNL offers. This real estate investment trust boasts 321 single-tenant properties it leases out to 100 tenants across 41 industries in eight countries, including the U.S., the U.K., Germany and Finland. The industry diversification is outstanding, with financial services the largest slice of the pie at just 14%; but its properties span everything from aerospace to healthcare to utilities. Moreover, its tenants include stable companies such as FedEx (FDX), Family Dollar and ING Groep (ING), but no one of them makes up more than 5% of straight-line rent.

Moreover, the stock has been battered to the tune of about 30% in a year, driving its yield to well over 12%.

But …

Global Net Lease (GNL) Keeps Flooding the Market With Shares

While Global Net Lease does continue to post growth, its share count is expanding, too, diluting the value of its business. Moreover, the company also pays out fees to external management that drag on operations, and in fact, that healthy dividend isn’t perfectly covered. Last year, the company paid out $2.13 per share in dividends but only collected $2.03 per share in core funds from operation.

The dividend is a real concern here. The payout hasn’t budged in years, and now GNL is overstretching to keep its promises. While a 12% yield is tempting, it may not be a 12% yield for long.

Stag Industrial (STAG)
Dividend Yield: 5.9%

I have written about STAG Industrial (STAG) before, and in the context of monthly dividend stocks, it’s worth mentioning it again.

STAG Industrial is a REIT that specializes in warehouses, boasting 70.2 million square feet across 365 buildings in 37 states. I realize the warehouse business doesn’t exactly stir one’s spirits, but this word might:

E-commerce.

Three of STAG’s top 10 tenants are XPO Logistics (XPO), FedEx (FDX) and DHL – companies that have plenty to gain as more people have their goods delivered rather than make their way to the store. And as more retailers move to this model, they too will need the kinds of facilities that Stag provides.

The fundamental story here still looks great. STAG grew funds from operations by 7% to $1.69 per share in 2017, and occupancy sits at 95.3%. Moreover, the company increased its dividend again – the third hike in 12 months – to 11.83 cents per share. That means STAG’s monthly check is well covered, with a roughly 84% FFO payout ratio, and at 14 times FFO, I would consider this attractive REIT fairly priced.

Shaw Communications (SJR)
Dividend Yield: 4.9%

Shaw Communications (SJR) is a Canadian telecom with a hefty yield at the moment. The question investors want to ask themselves is, are they getting a still-stable payout such as those from AT&T (T) or a Verizon (VZ), or are they getting an eventual dividend cut a la Frontier Communications (FTR) or Windstream (WIN)?

The answer is somewhere in between – and that’s not a good thing.

Shaw, which offers internet, television, telephone and other services across several provinces, is in the midst of a self-proclaimed “total business transformation” that includes a heavy renewed push in its wireless business to help offset continued declines in wireline operations. The company will be taking a $450 million charge related to this restructuring, including accepting 3,300 employee buyouts. All told, the company is reducing its workforce by roughly a quarter.

The market has been punishing SJR shares, which are off more than 17% since Jan. 1. That has helped plump the yield up on this monthly dividend payer to nearly 5%. However, SJR remains more expensive against future earnings estimates than rivals such as Telus (TU) and Rogers Communications (RCI), and its path to normalcy is far from clear. Among other things, it still will have to find funds to make itself competitive in the upcoming push to transition from 4G to the newer 5G technology, which includes buying spectrum and upgrading its network.

While 5% is nice if you can get it for AT&T or Verizon, which enjoy an effective duopoloy in the U.S., it still doesn’t seem quite enough to justify a purchase in Shaw, which faces a much less sure path ahead – especially in the short-term.

Your Best Plays Today: Monthly Payouts and 8% Yields 

Monthly payers deserve a place in your portfolio, period. If you’re retired, they keep your cash flow as smooth as silk. And if you’re not retired, you can reinvest your dividends faster—giving your nest egg a nice extra boost.

If that’s not a win-win, I don’t know what is!

That’s why I’ve dropped four monthly dividend stocks into the “6 pack” of steady investments that make up my .

Quality monthly dividend stocks are a rare breed, but with the right picks, you can use the power of faster compounding to achieve a fully paid-for retirement for around $500,000 – more than a quarter of a million dollars less than the suits at Merrill Lynch say you need to retire well!

And then once you hit retirement, you can collect a smooth, steady stream of monthly dividend checks to use against your monthly bills.

That’s as win-win as it gets!

My “8% Monthly Payer Portfolio” can hand you a rock-solid $40,000 per year in regular income. That translates into a steady drip of more than $3,300 per month that won’t vary – other than the occasional payout increases granted by these dividend dynamos, that is!

This strategy isn’t capped at $500,000 – if you’ve saved up even more, you could be looking at monthly income of $6,349 or even $12,698 per month. That pummels the kinds of payouts you would see from a basket of quarterly-paying Dividend Aristocrats.

One last bonus: Several of these picks are more than just slow-and-steady dividend drippers – they also possess several catalysts for growth, meaning they can deliver income while growing your nest egg! That’s a vital part of retirement that many people overlook, convinced that their only strategy after age 65 is to watch their portfolio wither as they start to take withdrawals. That’s just not true!

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