Investors Alley

The latest bank earnings season highlighted the difference between the banks that rely on deal-making (Goldman Sachs and Morgan Stanley) versus those that are deposit banks that rely more on U.S. consumers and businesses (Bank of America, JPMorgan, Wells Fargo, Citibank).

Deposit banks are in a generally better position to earn greater margins on the vast piles of customers’ funds at their banks. This came through during the earnings calls. While there was nervousness over the direction of a falling U.S. housing market, and its impact on banks’ balance sheets, executives’ comments were notable for the insistence that they were not seeing any signs of consumer weakness.

Let’s take a look at the best deposit bank – one that’s backed by Warren Buffett’s himself…

It’s a Good Time to Be a Bank

The large nationwide U.S. banks are benefiting from the Federal Reserve’s policy of increasing interest rates to combat inflation. They are charging more for consumer loans and corporate lines of credit, without offering their customers significantly better rates on deposits.

These banks are experiencing higher demand for their lending products as companies tap credit lines to prepare for a possible economic slowdown, and consumers borrow on their credit cards to make ends meet.

This was clearly shown in the latest results, which were boosted by net interest income (NII) — the difference in what they pay on deposits and earn from loans and other assets. To be blunt, handling money for the masses remains a bright spot for America’s biggest banks.

At JPMorgan, Wells Fargo and Citibank, credit card purchases grew 18% on average, and card loan balances rose 17%.

Net interest income at JPMorgan and Wells Fargo jumped by more than a third and by 18% at Citibank, amid the revival in loan demand and higher interest rates. JPMorgan reported NII of $17.6 billion in the third quarter, up 34% year-on-year and a new record for the bank. And both Wells Fargo and Citibank reported their best NII numbers since 2019.

And the outlook going forward is still rosy. Both JPMorgan and Wells increased their full-year guidance for NII. JPMorgan is now forecasting that its NII for 2022 will rise around 38% this year, while Wells Fargo says it will rise 24% year on year. Citibank expects its NII to grow by $1.5 billion to $1.8 billion in the fourth quarter.

So which of the major U.S. banks is the better investment? Why not go with the one that Warren Buffett made a major investment into earlier this year?

Buffett and Citibank

Buffett is deeply familiar with the banking and financial services industry. He believes it’s a relatively straightforward business and one that can be extremely lucrative if it is well managed.

While Buffett has unloaded some of his other bank stock holdings, he added a new bank to his collection this year: Citigroup. During the first quarter of 2022, he added 55 million shares ($2.5 billion) of Citigroup at $44 a share to the Berkshire Hathaway portfolio.

Apparently, Buffett is betting on a turnaround story at the bank. So far, at current prices, Buffett’s return on investment is about 10%, excluding dividends.

Buffett is not alone. Morningstar rates Citibank as its top pick in the sector, saying “the bank is trading in deep value territory”.

And indeed, Citibank is in deep value territory, lagging badly behind its peers. Over the past five years, the stock is down over 31%. For comparison, the SPDR S&P Bank ETF (KBE) is up 9%. The beating the stock has taken has made it cheap, which Buffett loves. Citibank shares are trading at little over half of the tangible book value of $80.

The company is now attempting to resurrect its fortunes. Last year, Citibank’s board appointed Jane Fraser as the new CEO — making her the first female leader of a major U.S. bank.

At its Investor Day in March 2022, Citibank outlined plans to achieve an 11%-12% return on tangible common equity over the medium term. It highlighted its focus on five interconnected businesses: Services (treasury & trade solutions), Markets (fixed income and equities), Banking (investment banking, corporate banking and commercial banking), Global Wealth Management (Citi private bank and wealth management), and US Personal Banking (branded credit cards, retail services and retail banking).

The bank’s best-performing business is its institutional clients group, where the bank’s commercial banking and capital markets operations have scale and a unique global footprint that few can replicate. Its global presence differentiates the bank from all of its U.S.-based peers, and its wide geographical footprint should help Citibank remain the bank of choice for multinational companies.

Citibank: Buffett Value Play

Like Buffett, you will have to be patient with Citibank. There remains a long road ahead for the bank to grind through the many steps of its turnaround. But it is simply too cheap to ignore.

While you are waiting, you can collect a nice dividend from Citibank. It currently pays a quarterly dividend of $0.51 a share, for a yield of 4.16%.

The stock is a speculative (waiting for the turnaround) buy anywhere below $50 per share.
That’s what my old coworker told me years ago. I listened up because he was the most successful broker I ever worked with. And also incredibly lazy. He found a small niche in the market no one talks about and made enough to buy in the most expensive zip code in Maryland. Here’s what he invested in.

If you think that last week’s inflation numbers would cause the Fed to pivot, I have a bridge conveniently located in lower Manhattan that offers easy access to Brooklyn available for immediate sale.

You could make millions charging other people big bucks to use your new bridge and recoup your costs in no time.

Yes, the chatter last Thursday was that the new inflation would allow the Fed to slow the pace of rate hikes, and so stocks skyrocketed.

But this does not mean rates have stopped climbing. The Fed itself has said so.

Here’s why, and how to position your portfolio to weather the coming rate hikes…

Look, the Fed has already talked about doing slowing the pace of rate hikes, possibly starting as soon as December.

But Jay Powell warned us that the pace did not matter as much as the ultimate level of Fed Funds rates would reach. He said that he now thinks that will be higher than the estimated 4.6% level.

The additional rate hikes of at least 100 basis points are not baked into stock prices.

With the S&P 500 priced at almost 20 times earnings, I cannot say stocks are cheap here either.

Fed officials rushed out last Thursday to tell people that inflation was not beaten yet and more rate hikes were coming:

Mary Daly, the head of the San Francisco Fed, said 7.7% might be lower than 8%, but it is a long way from the 2% target.Cleveland Fed President Loretta Mester said the inflation trend is still unacceptably high.Kansas City Fed President Esther George told us that inflation was still too high and monetary policy had more work to do.Dallas Fed President Lorie Logan said that there were no rate cuts anytime soon and that more increases were coming.

The markets ignored them and partied like it was 1999.

The boom of 1998, as you you may recall, was followed by a very ugly 2000.

For now, I am sticking with my strategy of owning heavily discounted closed-end funds in Underground Income and low PE, high-yield bank stocks with solid balance sheets and excellent credit conditions, and carefully selected undervalued REITs for readers of The 20% Letter.

So far, they are both working really well. I expect that to continue.

I am also constantly on the lookout for special situations with upside potential regardless of market movements for you, the readers of The Hidden Profits Report.

One of my favorite hunting grounds for special situations is among companies that have announced a strategic review. A strategic review is a discussion of a board committee about what changes need to be made to the business to increase profitability., There is often a discussion about selling unprofitable or non-core subsidiaries or selling the company outright.

The board of Garrett Motion (GTX) is said to be having talks about strategic alternatives and possibly selling the company.

You may never have heard of Garrett Motion if you are not a car-loving gearhead. If you are a gearhead, you are very familiar with this company,

Garrett Motion makes turbochargers for the automobile industry and is one of three companies that dominate the industry.

The company filed for bankruptcy in 2020 and emerged in April 2022. Garrett Motion did not file because the business needed to be better or because they could not pay their bills.

It was the only way to settle a matter involving asbestos brake pads with its former owner Honeywell (HON).

The pads in question were sold back in the early 1980s.

That is behind them, and the company should produce more than $300 million of free cash flow in 2022.

Garrett Motion is not worried about competition from electric cars killing the turbo business. Instead, they are pioneers in the development of electric vehicle turbochargers.

Construction and farm machinery will always need some turbocharged boost to get the job done.

The market for turbochargers, both conventional and electric, will be growing for years to come.

With an eye to the future of the automobile, Garrett Motion is also developing cybersecurity systems for connected cars.

This stock is cheap. Management expects to produce between $310 and $370 million this year. The equity value of the stock right now is just $461 million.

The stock is trading at 1.3 times free cash flow.

A sale of this company would be worth at least twice the current stock price and probably more than that level.

The stock has no coverage from Wall Street, so the best way to unlock this company’s massive amount of hidden value might be to sell the business outright.

No matter what the market does, you own a great business producing tons of cash flow at a ridiculously low valuation and with a decent probability of a sale sooner rather than later.
It’s raised its dividend 37.5% on average, could be acquired, benefits from rising interest rates, trades at massive discount, and pays an 8% yield. This is my top pick for income during a rough market. Click here for details.

There was a recent major development that many investors have almost completely ignored: the U.S. government is getting into the domestic mining and battery industries.

As part of the Inflation Reduction Act (IRA), the Department of Energy handed several companies big lumps of cash in mid-October, ranging from $50 million to $316 million, adding up to almost $3 billion in total investment.

Today, let’s look at the firm that will benefit the most…

Building a U.S. Battery Supply Chain

The Inflation Reduction Act introduces strict rules about the sourcing of raw materials used in manufacturing electric vehicles (EVs) and their batteries. This is the government is making a push to build up the local supply chain. The aforementioned grants all went to companies building or planning battery metals processing facilities.

The goal of the restrictions is twofold: first, to boost the domestic automakers that are moving at top speed into electric vehicles. Second, to develop a local supply chain for electric car batteries.

The European Automobile Manufacturers’ Association (ACEA) understands this perfectly, having noted in a September statement: “The new rules have restricted the eligibility for tax incentives to a relatively small number of vehicles assembled in North America in the short term and, in the medium term, may disqualify any vehicle at all from obtaining such a benefit due to very high local-content rules for batteries.”

Benchmark Mineral Intelligence is a specialist information provider for the EV battery industry. It has raised its forecast for the North American EV battery industry, thanks to the IRA legislation. Benchmark forecasts that North America will now produce 12.3% of the global output of batteries by mid-decade, up from the prior forecast of 8.2%.

Lithium

The key component for the current generation of EV batteries is lithium.

Lithium and many of the other raw materials that are used for electric batteries, such as graphite, require significant processing to get to the high-purity forms that go into the final product. China’s existing expertise and production capacity mean it will comfortably remain the top dog for years to come.

As the electric vehicle market grows, other countries will need to increase their self-reliance due to the race for raw materials and the potential for geopolitics leading to export and import routes being closed off. That’s why the IRA legislation was so important.

And make no mistake: a lot of lithium will be needed if the EV industry is to really take off.

Benchmark Minerals says that by 2040, the industry will need to produce more lithium in a month than was mined in all of 2021!

That number could make one conclude that, between soaring demand and the cash being thrown around by the U.S. government, any company with lithium exposure is worth investing in. However, I am taking a more nuanced approach.

Albermarle

I prefer to invest in a major lithium producer that is a member of the S&P 500—Albermarle (ALB).

The company is a global manufacturer of highly engineered specialty chemicals for a wide range of markets. It became the world’s largest lithium producer through its January 2015 acquisition of Rockwood Holdings. Its other leading products are bromine (second biggest global producer)—which is used in fire safety solutions—and the catalysts used in oil refining.

Lithium, though, generates the majority of total profits. Albermarle produces the metal through its own salt brine assets in Chile and the United States, as well as two joint venture interests in Australian mines: Talison and Wodgina.

Albermarle’s Chilean operation is among the world’s lowest-cost sources of lithium. And the Australian Talison site, in which the company has a 49% interest, is one of the best spodumene resources in the world. This allows Albemarle to be one of the lowest-cost lithium hydroxide producers, as spodumene (lithium hard rock concentrate) can be converted directly into lithium hydroxide.

The company plans to expand its lithium production from 88,000 metric tons in 2021 to nearly 500,000 metric tons over the next decade. This includes the company’s 60% interest in the Wodgina spodumene operation (Australia’s Mineral Resources (MALRY) retains the other 40% interest). The joint venture will begin producing spodumene and have a 50,000-metric-ton lithium hydroxide plant in Australia.

Albermarle got a nice $150 million grant from the U.S. Department of Energy as part of the first set of projects funded by the IRA legislation. The grant funding is intended to support a portion of the anticipated cost to construct a new, commercial-scale, U.S.-based lithium concentrator facility at Albemarle’s Kings Mountain, North Carolina site.

Albemarle expects the concentrator facility will supply up to 350,000 metric tons per year of spodumene concentrate to the company’s previously announced mega-flex lithium conversion facility. The mega-flex conversion facility is expected to eventually produce up to 100,000 metric tons of battery-grade lithium per year, to support domestic manufacturing of up to 1.6 million EVs per year.

Buy Albermarle

I believe that the lithium market will remain undersupplied throughout the rest of the decade, supporting prices well above the marginal cost of production.

This is important because Albemarle has wised up on to how to price its lithium. Management’s former lithium pricing strategy hurt shareholder value in the past, by limiting the company’s upside and not preventing downside when prices fell.

Earlier this year, however, management finally changed its approach to pricing, announcing a new three-tier pricing system. Under this system, 15% of battery quality lithium is sold at short-term prices based on the market price, and 65% is sold at index-referenced prices, some of which have a set cap and floor, but fluctuate based on market prices. Albermarle sells the remaining 20% at fixed prices that reset every six to 12 months.

For long-term investors looking to invest in the lithium industry, Albemarle, which owns two of the best resources in the world, is a great choice. The stock is a buy anywhere around the $300 per share level.
It’s raised its dividend 37.5% on average, could be acquired, benefits from rising interest rates, trading at massive discount, and pays an 8% yield. This is my top pick for income during a rough market.Click here for details.

Russia’s invasion of Ukraine massively disrupted the European energy scene. The crisis revealed what I believe will be the energy story for the next decades: liquefied natural gas (LNG) is the fuel source to power the globe.

A recent report from Texans for Natural Gas highlights how the LNG market has shifted dramatically in response to Russia cutting off energy sources to western Europe.

Let’s take a look at this report – and how to invest for wealth and income from this trend…

Here are some points from the report:

America drastically increased its LNG exports to Europe: 74% of all U.S. exports went to Europe in the first half of 2022. In 2021, exports to Europe only represented 34% of U.S. LNG exports in that same period.The U.S. became the world’s largest LNG exporter in the first half of 2022, with the primary destination of U.S. LNG exports shifting Asia to Europe.Europe must continue to build LNG infrastructure that lets it turn away from threatening foreign actors like Russia.

Liquified natural gas, when “regasified” into natural gas, provides a clean burning energy source that can be used to generate electricity or heat. The challenge with LNG is the massive infrastructure required for liquefaction, transportation, and regasification. However, with the infrastructure in place, LNG can be produced and transported to wherever it is needed most—or wherever it will fetch the best price.

The U.S. contains massive natural gas reserves. Energy companies in the U.S. have the infrastructure that allows the liquefication and shipping of LNG to all parts of the world.

Here are some LNG-focused investment ideas:

Over the last 15 years, Cheniere Energy (LNG) has invested more $20 billion to build the world’s second-largest natural gas liquefaction facility (it has two facilities in total). At Cheniere’s current production level, the company is shifting from reinvesting all free cash flow to slower production growth, combined with paying dividends to investors. Cheniere is the premier stock for investors looking to have LNG exposure.

In a recent presentation, Cheniere noted: “Global demand growth projected by 2040 [is] expected to drive the need for significant incremental LNG supply beyond capacity currently operational and under construction.”

Flex LNG Ltd. (FLNG) is an LNG shipping company with a fleet of thirteen fuel-efficient, fifth-generation LNG carriers. Like many shipping stocks, Flex LNG pays large dividends and currently yields 8.6%.

And finally: Over the last several years, New Fortress Energy (NFE) has been building an end-to-end LNG infrastructure network. The company turned EBITDA positive in 2021 and will generate more than $1 billion of EBITDA this year; New Fortress is forecasting $2.5 billion next year.

Global energy usage is not a static number; as populations grow and economies grow (especially in the second and third world), energy demand will increase. LNG is the energy source that can meet the growing demand for clean available fuel.
It’s not REITs or blue chips like Disney. A small, little-talked about area of the dividend stock market is pumping out market-beating returns like no tomorrow. Over 22 years, they’ve handily beat the market… and I have the #1 stock of these to give you now.

The collapse in cryptocurrencies (brought about by the insolvency of FTX) spilled over into equities markets last week. Bears are betting that Coinbase (COIN) is going to succumb to the downside pressure as well.  While the FTX news was being digested by the market, traders purchased a large amount of puts in COIN, possibly expecting

In late 2021, when it became apparent that inflation would stay persistent and increasing, I started to get a lot of questions about where to invest.

When inflation rears its ugly head, there is no magic list of investments that help you beat inflation all of the time. While it would be good if there were such a list, I advised looking for companies and stocks that would see profits grow with higher interest rates.

One particular idea I shared has proven to work out very well…

For many months, as inflation took off, the Federal Reserve continued to call the inflation “transitory” and kept interest rates low. While the Consumer Price Index was pushing 8% as early as February, the Fed did not get serious about raising interest rates until April, and the fed funds rate didn’t go above 1.0% until June.

As a result, for those companies that benefit from higher rates, the increases in interest rates have lagged inflation by many months. Only now, as third-quarter earnings come out, do we see the effects of higher rates. In the meantime, the stock market has double dipped into bear market territory, putting us at a point at which these companies are ratcheting up profits and dividends while, at the same time, share prices are low.

Business development companies (BDCs) provide financing solutions for small-to-medium-sized corporations. BDCs operate under special laws that require them to pay out 90% of net investment income as dividends. As a result, BDC shares sport very attractive yields.

Almost all BDCs make variable-rate loans to their client companies. The BDC rules also require a BDC to maintain a low debt-to-equity capital structure. The structure allows a BDC to generate growing net interest income as interest rates increase.

The effects of higher rates kicked in during the 2022 third quarter. BDC dividend increases have been hitting my inbox almost daily. It’s gotten a level at which, if you own shares of a BDC that hasn’t increased its dividend, I would look at selling and investing in one that is now growing its payout.

Here are the four largest BDCs by market cap, with their most recent dividend changes:

On October 25, Ares Capital Corp. (ARCC) announced a $0.48 per share dividend to be paid on December 29. The new dividend was 12.3% more than the previous dividend. Ares has increased its dividend twice this year and paid several small supplemental dividends; it yields 9.7%.

FS KKR Capital Corp (FSK) pays a variable dividend. The company paid $0.68 per share in July and $0.67 in October; and on November 7, it declared a $0.68 dividend to be paid on January 3. The shares yield 12.7%.

Before its last dividend announcement on November 2, Owl Rock Capital Corp. (ORCC) had paid a level dividend since its July 2019 IPO. On November 2, ORCC increased its dividend by 6.5%. Company management also announced supplemental quarterly dividends would be paid as profits allow. Owl Rock Capital yields 10.2%.

On September 7, Blackstone Secured Lending (BXSL) increased its dividend by 13.2%. The company has also paid hefty supplemental dividends. This BDC is just a year old, so investors should review quarterly earnings to look for a trend of future dividends. Blackstone Secured Lending yields 10.2%.

You can see how the BDC sector is on a path of growing dividends combined with excellent yields. Dozens of companies use the BDC business structure, and with the Fed continuing to raise rates, 2023 will be a great year for BDC dividends.
It’s raised its dividend 37.5% on average, could be acquired, benefits from rising interest rates, trading at massive discount, and pays an 8% yield. This is my top pick for income during a rough market.Click here for details.

There is no doubt that semiconductor stocks have underperformed the overall stock market. Since early October, the S&P 500 Index ETF (SPY) has outpaced the Semiconductor Index ETF (SOXX) by 26%.

A big reason for this was because several large consumer-facing companies found themselves with too much inventory. Companies that make electronic consumer goods, such as PCs, smart TVs, smartphones, and game consoles stockpiled chips when supply-chain problems left them unsure they could meet demand for their products during the pandemic lockdowns.

But when the economy reopened in earnest earlier this year, the demand for electronic products collapsed as people returned to the office and shifted spending to services and travel. This, in turn, forced semiconductor manufacturers like Intel (INTC) to cut production.

However, the inventory problems dogging many in the chip industry should clear in the coming months. And while it may be early, it’s still a good time to look for opportunities in semiconductor stocks…

A good example of this is a company that was once a leader in the industry, dragged down by poor management and now once again trying to become a chip powerhouse. That company is the aforementioned Intel.

Intel’s Transformation

Since returning to Intel as CEO in early 2021, Pat Gelsinger—who had previously been at Intel from 1979 to 2009—has been focused on a mission: to transform the biggest semiconductor company in the U.S. into a major contract chipmaker that will rival Samsung and Taiwan Semiconductor (TSM). And if Gelsinger manages to pull it off, Intel’s transformation will completely reshape the global semiconductor industry.

Keep in mind that Intel built its business designing and making its own cutting-edge semiconductors, mainly for PCs and servers. Manufacturing chips for external customers—known as the foundry business–is new territory for Intel. Asian rivals, like Samsung and Taiwan Semiconductor, have dominated the global foundry market for many decades.

Gelsinger’s strategy is certainly an expensive one. Since he announced the company’s pivot in March 2021, Intel has planned spending of more than $70 billion for building and expanding its chip fabrication facilities, or fabs. The company’s spending plans include:

$20 billion for a chip facility in OhioNearly $17 billion to build a plant in Germany$3.5 billion to expand its chip packaging facility in New MexicoA $20 billion investment in Arizona fabsA nearly $17 billion expansion in Ireland.

On top of all that, Intel acquired the Israeli foundry firm Tower Semiconductor for $5.4 billion in February.

Intel hopes its massive bet will pay off. The company expects the foundry business will not only become a major new revenue source, but also a way to regain the technological edge in chip manufacturing lost to Asia over the past few decades.

Can Intel Pull It Off?

Wall Street hates Intel’s strategy. Its share price has more than halved since it embarked on its transformation, because Wall Street focuses on the short-term.

However, Intel does still hold the lion’s share of the PC and server processor markets.

Of course, the current slowing global demand for chips has hit Intel. The company reported a 20% year-over-year drop in its third-quarter revenue, and lowered its 2022 full-year revenue outlook to between $63 billion and $64 billion, down as much as $4 billion from its previous guidance.

Coupled with the heavy spending on its new foundry business, the company is now expecting to end 2022 with a negative $2 billion to $4 billion free cash flow, compared to the negative $1 billion to $2 billion it projected earlier this year.

I believe Gelsinger’s plan is sound. However, for it to work, Intel will need to win over customers from Taiwan Semiconductor and Samsung.

Intel has previously said that Qualcomm, Amazon’s AWS, and MediaTek have all signed up to use its manufacturing services. But it did not announce any new customers for the July–September quarter.

The key question is whether Intel can catch up in chip manufacturing technology. TSM and Samsung both began production of industry-leading 3-nanometer chips this year and aim to put 2-nanometer chips into production by 2025.

Meanwhile, Intel has still not been able to mass produce 5-nanometer chips, which are widely used in electronic products like smartphones.

But the company does say that it will begin manufacturing Intel 3 chips—its answer to TSM’s 3-nm tech—in the second half of 2023. Intel 18A production, intended to compete with TSM’s 2-nm chips, is slated to start in the second half of the following year.

Intel needs a lot more than just technology advancements. It has to build up a third-party intellectual property portfolio, design services to meet specific customer needs, and create a chip packaging and testing ecosystem with partners. All of these steps will then make it easier for customers to use Intel’s chip manufacturing process.

Keep in mind, too, that Intel has made a string of very savvy acquisitions to build its AI and automotive product offerings, including Altera, Habana Labs, Movidius, and Mobileye (MBLY), which IPO’d on October 26.

Can Intel make a successful transformation? I believe it can, with the aid of the U.S. government, which is in the midst of its geopolitical/technology battle with China.

I rate Intel as a speculative buy. Its balance sheet is still sound. At the end of 2021, it held about $38.1 billion in total debt and $28.4 billion in cash, cash equivalents, and short-term investments. The company still has ample resources for now to meet its debt obligations, capital expenditure requirements, potential acquisitions, and shareholder returns.

In the meantime, you can collect a nice quarterly dividend from INTC—shares currently yield 5.13%. Intel has paid out quarterly dividends ranging from $0.02 to $0.37 per share since December 1, 1992, and over the past five years, Intel’s dividend yield has averaged 2.4% per year, making the current yield quite attractive.

The stock is a buy in the mid- to upper 20s.
It’s not REITs or blue chips like Disney. A small, little-talked about area of the dividend stock market is pumping out market-beating returns like no tomorrow. Over 22 years, they’ve handily beat the market… and I have the #1 stock of these to give you now.

I’m looking at the chart of a commodity that’s been beaten down for almost 15 years.  However… The tide has turned… and the chart shows it’s starting to turn upwards potentially signaling a new bull market.  If that’s the case, it could be one of the biggest investment opportunities of the 2020s.  Every week, I

Last week, I made several presentations at the MoneyShow conference in Orlando. For one talk, I covered the pros and cons of covered call ETFs. These high-yield ETFs can bring a lot of income into your portfolio.

This week, two of my recommendations announced surprisingly large distributions. I’ll take the money!

Let’s take a look at both…

Covered call ETFs employ an options selling strategy to generate income and dividends from an underlying portfolio. You can find these ETFs based on the major stock market indexes and also commodity ETFs such as crude oil, gold, and silver.

These ETFs pay monthly dividends. The dividends are variable but typically provide yields in the low teens for the index tracking funds, and the commodity funds sometimes yield up into the high teens.

During my MoneyShow presentation, I covered the details of 13 different covered call ETFs. Three of those are recommended investments in my Dividend Hunter service. Last week, two of the three made their monthly dividend announcements, and I was very happily shocked.

The JPMorgan Equity Premium Income ETF (JEPI) announced a $0.60627 distribution paid on November 4. The October dividend was $0.48084. This year, the distributions ranged from $0.38181 to $0.62102. Based on the trailing three dividends, JEPI yields 12.2%. The JP Morgan website shows a 30-day SEC yield of 12.51%.

The JPMorgan Nasdaq Equity Premium Income ETF (JEPQ) declared a $0.68125 distribution, also paid on November 4. The October dividend was $0.37954. JEPQ is a new ETF and has only paid dividends since June. The current yield, based on trailing dividends, is 15.1%. The SEC yield shows an eye-popping 17.51%.

I have no idea how they calculate the SEC yields for a covered call fund, so take those with a very large grain of salt.

Also, these funds pay variable dividends, and a big one this month foretells nothing about next month. If you invest in these funds, be prepared for some monthly payouts to be lower and some, like this month, to be higher.

With my Dividend Hunter recommendations list, I have a balance of stable dividend investments, variable dividend investments, and some dividend growth investments. The goal is to earn a high yield with predictable income.
What’s the one thing you need to stay retired? That’s right… cash. Money to pay the bills. Money to weather any financial crisis like the one we’re in now and whatever comes next. I’ve located three stocks that if you buy and hold them forever, they could serve as the backbone to your retirement. Click here for details.

It’s earnings season, so there’s been plenty of options action in single stock names. Recently, a strategist purchased what appears to be a very bullish call spread in Disney (DIS). The call spread – buying one call and selling another at a higher price in the same expiration period – doesn’t expire until right after