I have a large number of readers who have been with me since the launch of my premium advisory, The Daily Paycheck, back in January 2010. They watched as I slowly transformed the $200,000 cash stake from my company into the $291,776 portfolio it is today. New subscribers are now greeted with a portfolio of more than 50 securities. And the questions I get asked most are 1) How do I get started? and 2) Can I use this strategy if I have less than $200,000 to invest? The short answers to those questions are: slowly and absolutely.  But I… Read More

I have a large number of readers who have been with me since the launch of my premium advisory, The Daily Paycheck, back in January 2010. They watched as I slowly transformed the $200,000 cash stake from my company into the $291,776 portfolio it is today. New subscribers are now greeted with a portfolio of more than 50 securities. And the questions I get asked most are 1) How do I get started? and 2) Can I use this strategy if I have less than $200,000 to invest? The short answers to those questions are: slowly and absolutely.  But I want to spend a little time today explaining the “science” behind The Daily Paycheck strategy and how you can use this strategy to meet your individual needs. #-ad_banner-#It was as much a surprise to StreetAuthority co-founder Paul Tracy as it was to me. As an experiment, Paul tried to build a personal portfolio of dividend paying stocks to see if he could get 30 dividend checks in a month. But he achieved far more than the joy of receiving dividends every day. Paul enrolled all his securities in an automatic reinvestment program through his online brokerage account. And before long,… Read More

Selling puts in your investment account can be a tremendous strategy for generating reliable income while taking on less risk than more traditional income strategies like buying and holding dividend stocks. The trading approach is made possible by selling a put option to speculators who either: 1. Think that the underlying stock or exchange-traded fund (ETF) is headed lower, or 2. Want to hedge their current exposure.#-ad_banner-# From our perspective as option sellers, one of the most important decisions is what types of securities to sell puts against. Specifically, some traders struggle with the… Read More

Selling puts in your investment account can be a tremendous strategy for generating reliable income while taking on less risk than more traditional income strategies like buying and holding dividend stocks. The trading approach is made possible by selling a put option to speculators who either: 1. Think that the underlying stock or exchange-traded fund (ETF) is headed lower, or 2. Want to hedge their current exposure.#-ad_banner-# From our perspective as option sellers, one of the most important decisions is what types of securities to sell puts against. Specifically, some traders struggle with the decision of whether to sell puts against individual stocks (which give them a risk/return profile that is affected by the individual company dynamics), or against broad indexes or ETFs (which offer more diversification). To determine where you should put your capital to work, let’s look at the driving forces for both risk and returns based on both of these approaches. Volatility And Diversification One of the primary benefits of investing in an ETF as opposed to individual stock positions is that the ETF gives you instant diversification. However, keep in mind that not all ETFs are as diversified as… Read More

The transportation sector is the lifeblood of the global economy — but a glance at a chart of the highs and lows of this cyclical sector can look a lot like the surface of a stormy sea.  Take the Baltic Dry Index, for example — it began the year at record lows but has more than doubled in the past few months.  Out-of-favor industries attract value investors who are looking for a bargain and this upswing in the index could be the beginning of a trend reversal, as the transportation sector is often seen as a… Read More

The transportation sector is the lifeblood of the global economy — but a glance at a chart of the highs and lows of this cyclical sector can look a lot like the surface of a stormy sea.  Take the Baltic Dry Index, for example — it began the year at record lows but has more than doubled in the past few months.  Out-of-favor industries attract value investors who are looking for a bargain and this upswing in the index could be the beginning of a trend reversal, as the transportation sector is often seen as a leading indicator. A classic value story is beginning to take shape, and investors are climbing aboard. Global trade is suffering due the widespread downturn, and the shipping sector has taken a dive from its highs less than a decade ago. Nervous businesses have curbed trading activity, keeping demand for shipping lines low. For 2013, global container trade growth is expected to be around 4.7%, rising to 5.7% in 2014.  That growth is what makes a company that’s lowering costs and increasing revenues by 6.4% from the same quarter last year worth a closer look. TAL International Group (NYSE: TAL) is… Read More

For 41 weeks in a row, the options trades I’ve recommended to my Income Trader readers have been profitable. And on average, my readers are collecting 7.5% in “Instant Income” every 48 days. So far, we’re 32 for 32 when it comes to closed trades. How am I doing it? It’s actually pretty simple… but it requires some investors to leave their comfort zone. Options are one of the most misunderstood corners of the financial world. Many investors steer clear of options because they have a reputation for being risky, but that’s not always the case…… Read More

For 41 weeks in a row, the options trades I’ve recommended to my Income Trader readers have been profitable. And on average, my readers are collecting 7.5% in “Instant Income” every 48 days. So far, we’re 32 for 32 when it comes to closed trades. How am I doing it? It’s actually pretty simple… but it requires some investors to leave their comfort zone. Options are one of the most misunderstood corners of the financial world. Many investors steer clear of options because they have a reputation for being risky, but that’s not always the case… My strategy involves selling options on undervalued stocks. And as I’ve mentioned here, here and here, selling “put” options is one of the most effective income strategies in the world. #-ad_banner-# But today, I want to tell you about a different strategy — selling covered calls. A covered call strategy involves selling call options on stocks that you own. This allows you to generate income from selling options while benefitting from the potential upside by owning the stock. The downside risk is partly reduced by the income generated from selling options, which offsets potential losses in the stock. If you’re… Read More

Dividend investors crave predictability. Once they lock onto payment streams, they don’t want to hear about any interruptions. And if a company dares to withhold a quarterly dividend payout, then many investors simply head to the exits. I discussed this phenomenon recently with regard to Carl Icahn and his big stake in CVR Refining (NYSE: CVRR).#-ad_banner-# As I noted earlier this month, CVR had a big hiccup with its third-quarter dividend, but it appears positioned to pay out $3 or $4 per unit in dividends next year. Shares trading around $22 don’t begin to reflect that potential income. Amazingly, a… Read More

Dividend investors crave predictability. Once they lock onto payment streams, they don’t want to hear about any interruptions. And if a company dares to withhold a quarterly dividend payout, then many investors simply head to the exits. I discussed this phenomenon recently with regard to Carl Icahn and his big stake in CVR Refining (NYSE: CVRR).#-ad_banner-# As I noted earlier this month, CVR had a big hiccup with its third-quarter dividend, but it appears positioned to pay out $3 or $4 per unit in dividends next year. Shares trading around $22 don’t begin to reflect that potential income. Amazingly, a virtually identical scenario has just played out with another oil refiner. And the setup is every bit as compelling. A series of technical problems at a key refinery led to a sharp drop in output for Alon USA Partners (NYSE: ALDW), the master limited partnership (MLP) of Alon Energy (NYSE: ALJ). In fact, the quarterly production was so weak that Alon USA Partners didn’t simply make less money — it lost money. And though investors were bracing for a smaller than usual dividend, they got nothing. Shares of ALDW, which traded up toward the $30 mark in the spring, are… Read More

One of the boldest energy predictions of the past 10 years is about to become reality. According to the International Energy Agency, the U.S. will eclipse Russia and Saudi Arabia and become the world’s top oil producer by 2015. And looking forward, that trend is going to accelerate, with the agency saying that booming production has the U.S. on track for energy independence in 20 years.#-ad_banner-# But while that bullish trend will give energy companies a big boost, it’s also going to have a huge effect on local and regional economies. High-production states such as North Dakota, South Dakota and… Read More

One of the boldest energy predictions of the past 10 years is about to become reality. According to the International Energy Agency, the U.S. will eclipse Russia and Saudi Arabia and become the world’s top oil producer by 2015. And looking forward, that trend is going to accelerate, with the agency saying that booming production has the U.S. on track for energy independence in 20 years.#-ad_banner-# But while that bullish trend will give energy companies a big boost, it’s also going to have a huge effect on local and regional economies. High-production states such as North Dakota, South Dakota and Nebraska already enjoy the lowest levels of unemployment in the country. And as energy companies continue to add tens of thousands of new employees, those strong local and regional economies will fuel record demand for temporary housing, permanent housing and commercial real estate. That’s why I’m bullish on a little-known group of real estate investment trusts (REITs) that are exclusively focused on strong regional economies in position to profit from the North American shale boom. Not only do these REITs have the ability to produce big gains, but they also carry some of the industry’s biggest yields that are more… Read More

For a landlord, there’s absolutely no better tenant than this one. Every year, the 12,000 employees at the U.S. government’s General Services Administration (GSA) are tasked with spending roughly $66 billion dollars on all of the goods and services needed to keep our government running. The biggest expense: real estate. Although Uncle Sam owns nearly 10,000 buildings, he’s also the nation’s largest renter. The government never bounces a rent check, and tends to look for long-term, stable leases. And as it turns out, renting to the government is quite profitable. A top landlord to Uncle Sam throws off sterling cash… Read More

For a landlord, there’s absolutely no better tenant than this one. Every year, the 12,000 employees at the U.S. government’s General Services Administration (GSA) are tasked with spending roughly $66 billion dollars on all of the goods and services needed to keep our government running. The biggest expense: real estate. Although Uncle Sam owns nearly 10,000 buildings, he’s also the nation’s largest renter. The government never bounces a rent check, and tends to look for long-term, stable leases. And as it turns out, renting to the government is quite profitable. A top landlord to Uncle Sam throws off sterling cash flow, which translates into a rock-solid 7% dividend yield for investors. That’s a lot of reward for little risk.  I’m talking about Government Properties Income Trust (NYSE: GOV), a real estate investment trust (REIT) that leases more than 10 million square feet spread across 82 buildings, mostly to the public sector. (Roughly 68% of revenues are derived from the U.S. government, another 20% from state governments, 7% from the private sector, and 5% from the United Nations).  A sample of tenants includes: — The Centers for Disease Control (CDC) in Atlanta — Many of the Federal Bureau of Investigation’s… Read More

There’s a long-standing argument between finance academics and investors. #-ad_banner-# Most academics assert that the market is efficient and there is very little edge available for traders and short-term investors. When challenged with long-term success stories of traders who consistently beat the market, the academics say those individuals are presently the statistical outliers. In other words, they are simply lucky — just like the folks who win the lottery several times or consistently succeed at any game of “chance.” I am fortunate to be married to a woman who holds a doctorate in finance and is a great resource when… Read More

There’s a long-standing argument between finance academics and investors. #-ad_banner-# Most academics assert that the market is efficient and there is very little edge available for traders and short-term investors. When challenged with long-term success stories of traders who consistently beat the market, the academics say those individuals are presently the statistical outliers. In other words, they are simply lucky — just like the folks who win the lottery several times or consistently succeed at any game of “chance.” I am fortunate to be married to a woman who holds a doctorate in finance and is a great resource when it comes to programming trading strategies and understanding market microstructure. However, we are often at odds when it comes to the viability of active trading. I love to prove her ideas wrong by showing her papers by respected academics who take my side. I am certain she gets the same vicarious thrill when my market ideas are proven inaccurate. The one thing my wife and I agree upon is the wisdom of long-term dividend investing. (In that respect, we’re also in agreement with regular readers of Amy Calistri’s Daily Paycheck advisory, which emphasizes the portfolio-growing power of dividends.) My wife… Read More

I grew up in and still live in the South. During the dog days of summer in July and August, when folks say, “It’s not the heat, it’s the humidity,” believe me, it’s the heat AND the humidity. Everything wilts. People move more slowly. Business slows down a little, too. There’s a real and noticeable effect. The fixed-income markets — represented by Treasurys, corporate and municipal bonds, and other income-oriented investments — experienced the dog days firsthand this summer as investors fretted over the prospect of the Federal Reserve scaling back its bond purchases, also known as tapering. Look what… Read More

I grew up in and still live in the South. During the dog days of summer in July and August, when folks say, “It’s not the heat, it’s the humidity,” believe me, it’s the heat AND the humidity. Everything wilts. People move more slowly. Business slows down a little, too. There’s a real and noticeable effect. The fixed-income markets — represented by Treasurys, corporate and municipal bonds, and other income-oriented investments — experienced the dog days firsthand this summer as investors fretted over the prospect of the Federal Reserve scaling back its bond purchases, also known as tapering. Look what happened to the 10-year Treasury: #-ad_banner-#Over the summer, yields nearly doubled, shooting from 1.6% to almost 3%. Naturally, this caused plenty of chaos in the bond market. However, chaos always brings opportunity. When it comes to adding a fixed-income component to an investor’s asset allocation and providing an above-average income stream, preferred stocks are one of the most useful tools available. Preferred stocks are typically classified as part of the issuing company’s debt structure. However, unlike bonds, preferreds are issued in face values smaller than $1,000 and are junior to bank loans and bonds. Preferreds are, however, senior… Read More

Imagine pocketing checks from an investment throwing off 7% interest.  It’s not easy to picture in today’s low-interest environment with saving accounts paying less than 1% and the S&P 500 carrying a dividend yield just under 2%.  Now, imagine pocketing dividends from a company yielding 7% with rock-solid business income all but backed by, and coming directly from, the federal government. #-ad_banner-#Hard to believe, but an investment like this exists. Around the time that I first told High-Yield Investing readers about the company last month, one person was so excited about it, he was inspired to email me this question:  “I… Read More

Imagine pocketing checks from an investment throwing off 7% interest.  It’s not easy to picture in today’s low-interest environment with saving accounts paying less than 1% and the S&P 500 carrying a dividend yield just under 2%.  Now, imagine pocketing dividends from a company yielding 7% with rock-solid business income all but backed by, and coming directly from, the federal government. #-ad_banner-#Hard to believe, but an investment like this exists. Around the time that I first told High-Yield Investing readers about the company last month, one person was so excited about it, he was inspired to email me this question:  “I was recently reading about Government Properties Income Trust (NYSE: GOV). With monthly income plus special tax preference, it seems almost like a no-lose stock. Is it too good to ignore?” — David K. I wouldn’t call it a “no-lose” proposition, but GOV is definitely worthy of consideration.  As the name implies, Government Properties Income Trust owns buildings that are leased to state and federal government agencies. The company owns 82 properties from New York to California that hold more than 10 million square feet of rentable space. Virtually all (94%) of the income generated by these buildings comes from… Read More