{"id":25509,"date":"2023-06-21T11:59:39","date_gmt":"2023-06-21T15:59:39","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/10-big-9-dividends-basic-investors-have-missed\/"},"modified":"2023-06-21T11:59:41","modified_gmt":"2023-06-21T15:59:41","slug":"10-big-9-dividends-basic-investors-have-missed","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=25509","title":{"rendered":"10 Big 9%+ Dividends ‘Basic’ Investors Have Missed"},"content":{"rendered":"
\n

Too many folks are letting so-called \u201csafe\u201d yields on Treasuries distract them from the real<\/em> action these days: 10 \u201cstealth\u201d bond plays yielding way more\u2014I\u2019m talking 9%+ payouts here\u2014that Jay Powell just put on sale.<\/p>\n

These deals won\u2019t last: As the Fed pauses rate hikes, bond yields will roll over, driving up prices\u2014and our chance will be gone.<\/p>\n

These 10 Bond Deals (Yielding 9%+) Crush Treasuries<\/h2>\n

These 10 picks, which we\u2019ll get into below, are bond-focused closed-end funds (CEFs), and they\u2019re miles<\/em> ahead of 2-year Treasuries on every count.<\/p>\n

Dividends? These funds yield twice (and more) the 4.7% that 2-year Treasuries pay. That\u2019s critical now, because with 4% inflation, you\u2019re only getting a 0.7% \u201creal\u201d return from a 2-year Treasury. Oh, and our bond \u201c10 pack\u201d pays dividends monthly, too.<\/p>\n

<\/fbs-ad><\/p>\n

Upside? Forget about it with the 2-year. Sure, your principal is guaranteed, but inflation\u2019s cut could amount to 7% or more in the next two years. Our bond CEFs, on the other hand, give us capital gains as bond yields fall, driving bond prices higher. And that\u2019s just the start.<\/p>\n

CEFs Have 3 Ways to Pay Us<\/h2>\n

In addition to portfolio growth, our bond CEFs pay us through their closing discounts to NAV (which propel their market prices higher as they vanish) and, of course, their massive monthly payouts.<\/p>\n

To see this total-return \u201ctriple play\u201d in action, consider the PIMCO Dynamic Income Fund (PDI),<\/strong> whose forerunner, the PIMCO Dynamic Mortgage & Income Fund, we bought in my Contrarian Income Report<\/em> service in May 2016 (PCI merged with another PIMCO fund and PDI in late 2021). It\u2019s nicely doubled our money since.<\/p>\n

PIMCO is the Apple of the CEF world\u2014a brand CEF fans revere\u2014so its funds rarely trade at discounts. When they do, it\u2019s time to snap them up, as the profits can be stupendous as a PIMCO CEF flips back to the premiums at which it normally trades.<\/p>\n

Let\u2019s say you bought PDI during the March 2020 selloff. Back then, it traded at an unheard-of (for a PIMCO fund) 12% discount. Since then, that discount has flipped to a 5.5% premium\u2014driving a sweet 40% return that dusted the benchmark SPDR Bloomberg High-Yield Bond ETF (JNK).<\/strong><\/p>\n

No way a Treasury can match that. And through it all, PDI paid its monthly dividend\u2014current yield 14.5%!\u2014even dropping a special dividend in late 2022. This is why PDI still holds a place in our portfolio.<\/p>\n

Which brings me to the 10 other<\/em> Treasury-crushing bond CEFs we\u2019re targeting today. As mentioned, they yield north of 9%. Plus they sport discounts greater than 5% and market caps above $200 million, so they\u2019re plenty liquid for us\u2014but not so big that they\u2019re on the big players\u2019 radar.<\/p>\n

Here\u2019s the full menu. Below, I\u2019ll spotlight one of these funds that I see as a particularly interesting standout.<\/p>\n

Let\u2019s go ahead and cherry-pick the PGIM High-Yield Bond Fund (ISD), <\/strong>and its 10.2% yield, from the above list.<\/p>\n

The fund holds 619 bonds, mainly from US firms. Credit quality is mostly in the B to BB range, just outside the investment-grade line. That\u2019s where the best bond bargains lie, as most big players are limited to investment-grade paper.<\/p>\n

Moreover, ISD\u2019s 10% payout has grown\u2014<\/em>leaping higher twice in 2019, for a combined 24% hike, before holding steady through the ensuing three-year dumpster fire.<\/p>\n

The fund is run by Prudential, a mainstay of the financial world, so you know management gets the call when new bonds are issued. Connections count in bond-land, which is why many bond-fund managers regularly beat their benchmarks.<\/p>\n

That, by the way, is the case with ISD, which has soared past the benchmark SPDR Bloomberg High Yield Bond ETF (JNK) <\/strong>since inception in 2012<\/p>\n

Finally, we\u2019re getting a 9.1% discount on ISD. This one sported a discount less than half that in late 2021, so we can look forward to upside as Powell\u2019s rate-rising parade comes to a halt and the discount shrinks, pushing ISD\u2019s price higher.<\/p>\n

Brett Owens is chief investment strategist for <\/em>Contrarian Outlook<\/em>. For more great income ideas, get your free copy his latest special report: <\/em>Your Early Retirement Portfolio: Huge Dividends\u2014Every Month\u2014Forever.<\/p>\n

Disclosure: none<\/em><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Too many folks are letting so-called \u201csafe\u201d yields on Treasuries distract them from the real action these days: 10 \u201cstealth\u201d bond plays yielding way more\u2014I\u2019m talking 9%+ payouts here\u2014that Jay Powell just put on sale. These deals won\u2019t last: As the Fed pauses rate hikes, bond yields will roll over, driving up prices\u2014and our chance […]<\/p>\n","protected":false},"author":1,"featured_media":25510,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-25509","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"\n10 Big 9%+ Dividends 'Basic' Investors Have Missed | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Too many folks are letting so-called \u201csafe\u201d yields on Treasuries distract them from the real action these days: 10 \u201cstealth\u201d bond plays yielding way\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/ifintechworld.com\/?p=25509\" \/>\n<meta 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