June 16, 2020: The American Income Crisis + 2 High-Yield Stocks to Buy


The webinar was recorded June 16, 2020


You can find the slides here.


Chris [00:00:03] Hello and welcome to today’s Cabinet Wealth webinar. The American income crisis, plus two high yield stocks to buy. I’m your host, Chris Preston, chief analyst of the Cabot Wealth Daily Advisory and managing editor here at Cabot Wealth Network. With me today is Tom Hutchinson, chief analyst of our Cabot Dividend Investor Advisory, as well as our brand new Cabot Income Advisor newsletter. Today, Tom is here to talk about this low yield market environment and how with interest rates back near zero, it’s tough to generate income again. He’ll explain how to get a double digit annual income from supplementing dividend stocks with other strategic investments, which he’ll get into later. Tom will also tell you about two high yield stocks to get you started. This is an interactive webinar, which means we will be fielding your questions after Tom’s presentation wraps up. So if you have a question, feel free to ask it at any time and we’ll try to get as many of them as time allows, once Tom wraps up. Just keep in mind that we cannot offer advice in regards to your own personal investing situation or portfolio. First, let me introduce Tom. Tom is a Wall Street veteran with extensive experience in multiple areas of investing and finance. His range of experience includes specialized work in mortgage banking, commodity trading and in a financial advisory capacity for several of the nation’s largest investment banks. For more than a decade, Tom created an actively managed investment portfolios for private investors, corporate clients, pension plans and 401ks. He has a long track record of successfully building wealth and providing a high income while maintaining and growing principal. As a financial writer, Tom’s byline has appeared in the Motley Fool, Street Authority, Newsmax and more. He has written newsletters and articles for several of the nation’s largest online publications, conducted seminars and appeared on several national financial TV programs. For most of the last decade, Tom has authored a highly successful dividend and income portfolio with a stellar track record of success. Tom joined Cabot about a year and a half ago and today oversees our Cabot Dividend Investor and Cabot Income Advisor advisories. Bottom line – Tom knows what he’s talking about when it comes to income investing. So I’ll let him do just that. Tom, take it away.

Tom [00:02:12] Thank you, Chris. And welcome to the webinar. The American income crisis and two high yield stocks to buy. My name is Tom Hutchinson. I’m the chief analyst for Cabot Dividend Investor and have been since I took over for Chloë in December of 2018. Recently, and I mean very recently, the first issue was June 2nd for Cabot Income Advisor, which is specifically designed to give you a high level of current income, double digit annual income.

Tom [00:02:49] I’m very excited about the service. I think you should very seriously consider it. If you don’t have it already, I think it’ll be a huge benefit to you.

Tom [00:02:59] I want to congratulate you on a brilliant piece of decision making to join this call and especially. If you’re already a subscriber to Cabot Dividend Investor and or the new service Cabot Income Adviser. Dividend stocks have historically been a great place, not only for income, which is practically the only game in town now, but for a growing wealth at a reasonable risk and there’s good reason to believe that the performance will be even better on a relative basis in the future. And before I get started, I just want to mention a little bit about the current environment we’re in, because these are crazy times. I mean, there’s never been anything quite like this. As a matter of fact, I didn’t even prepare any statements until today because the world changes almost every day and had to wait till till now. But but it’s crazy out there. And the market crashed. Thirty four percent at record speed because of the pandemic lockdowns and then recovered at record speed. It’s all the way back to within six or seven percent of the all time high as the market expects a booming recovery in the third and fourth quarters. And the market usually gets it right. But with this rebound, you may think it’s too late. Or if you didn’t buy anything on the cheap. Maybe you missed it. That is not the case. The market, the overall index maybe hit new highs, but there are certain sectors and many stocks that are still very cheap. And it’s an environment where yields have not been this high or this many quality high yields available in a decade. There’s great opportunity, but beware, there’s also danger the financial hardship from this lockdown has not been realized. And there’s pain ahead. Companies will cut dividends. They’ll be bankruptcies. So we need to be careful of that. So we have an environment where it’s easier than normal to find a high yield, but more difficult than normal. To protect your downside. That’s sort of where we are. Now, back to the main topic, the American income crisis. It is an income crisis. It is a serious crisis. Take retirement, for example. Pensions are pretty much gone. Social Security is really only a supplement. And the lack of retirement income wasn’t all that big a deal in the past because, frankly, a generation or two, someone who retired didn’t expect to live all that much longer. Now, with advances in medicine and healthier lifestyles, many, many retirees can reasonably expect to live another 20 or 30 years. I mean, that’s and that’s a beautiful thing. I’m all for it. I hope I get one of those longer lifespans, but it also makes this income thing a lot harder. People are going to have to figure out a way to sustain an income for decades after they stop working. And they’re going to have to figure out a way to generate income from savings, which is not going to be easy to do with some of the interest rates that are out there, which I’ll show you in a minute. Ten year Treasury at Bellwether for for interest rates below one percent. Money markets below one percent, two year CD, it’s after inflation and taxes, you’ve got nothing. And see, income is the key to maintaining principle in retirement. Ideally, you want your savings to spin off interest and income for expenses and leave the principle intact. While hopefully growing it over time, but without sufficient income, you have to dip into your principal and you could quickly deplete savings. That’s a problem, especially for someone no longer working. When the principal runs out, then what? So at a time when it’s more crucial than ever that people generate an income from savings, low rates are making it nearly impossible, even if you only need a supplement to your income. It’s still a difficult thing to pull off in this environment. Now, here are some of the stats that currently exist. A average length of retirement, 18 years. Percentage of workers and in the private sector that still get a pension. 13 percent. An average annual Social Security, seventeen thousand five hundred and something. You have this income problem and a massive bubble of the population is coming upon  retirement or retirement age. The population is aging at warp speed. A third of Americans are now over 50. Fastest growing segment of the population, 65 and older. Ten thousand baby boomers on average are turning 65 every single day. Now, what does that mean? Well, it means when you’re driving, you’re probably going to get stuck behind somebody who pulls out into the middle of the road and then becomes stumped. But it’s also means that an enormous amount of people are going to have this income problem. And that makes it a nationwide problem. Here’s the average retirement situation, the median retirement accounts. A little over fifty eight thousand. If you’re lucky enough to get a pension a little over 9000, and I told you, Social Security, seventeen thousand something. Now, the median retirement account, fifty eight thousand at three thousand is five percent or so income from it averages twenty nine thousand four hundred and forty dollars. That’s not quite good enough. And then, as I mentioned before, when you look at the rates, when you have to generate an income, you can see what these rates are, 10 year Treasury bond point nine percent on and on it goes. And you look at these yields, that’s not going to get you anywhere. Basically, it’s two problems. Not enough savings and not enough return potential from the savings. Now, I want to take a minute.

Tom [00:10:00] And if you’re listening to this and you’ve heard some of these statistics and the facts and you may say, well, it doesn’t apply to me, I have a lot more savings or I have another source of income, and that may well be true. But but it’s likely to at least a portion of it is relevant to you. Plus, there’s something else. Even if it’s not true for you, it’s true in the aggregate. And when it’s true in the aggregate, it’s going to affect the market.

Tom [00:10:34] All these people needing income from dividends, stocks and such are going to affect the demand for it and the enormous demand is a big tailwind for these stocks and a tailwind investing of the tailwind’s a big deal. All of a sudden, you only have to be 50 percent right, instead of 90 percent right. It’s like a friendly rim in basketball. It’s much easier to get the ball. It’s much easier to get a successful investment with a tailwind like this. So you need savings and return.

Tom [00:11:10] Now, the two newsletter’s offered under Cabot Retirement Club, Cabot Dividend Investor, and these are dividend paying stocks and income generating securities with an emphasis on wealth building. Cabot Income Advisor, the new service is an emphasis on income. A high level of current income now. To be put very simply. And it can apply to different things than this, but Cabot dividend investors about accumulating wealth at a reasonable risk. cabot income advisor is about living off the income from that wealth in the future generally. But both of them also apply to people in other situations. Now, let me talk about Cabot dividend investor and the wealth building aspect. Building wealth with dividends, and you’d be amazed at the performance of dividend stocks. Over since between 1972 and the end of 2018. Dividend paying stocks returned on average. Eight point seven eight percent a year.

Tom [00:12:22] Compared to just two point four percent for non dividend paying stocks. And they’ve done so with less risk, they’re less volatile to the overall market, so much higher return, much less volatility.

Tom [00:12:40] Now, between nineteen hundred and twenty fifteen, dividends accounted for over 40 percent of market return.

Tom [00:12:48] Just the dividends themselves. 40 percent. A big chunk. And you can see by the chart here that.

Tom [00:12:56] You know, the left booming, the decade in the market, the more percentage contribution from dividends, which is a big thing to realize and flatten down markets, they continue to chug out the income.

Tom [00:13:11] They’ve also performed dividend and stocks because they’ve been more profitable. I mean, you have to be making enough money to consistently pay a dividend and grow it over time. You can’t fake it.

Tom [00:13:25] You have to have the goods to deliver. And the dividend paying companies tend to be far more profitable, much higher return on assets and return on equity.

Tom [00:13:38] And a lot of people don’t realize of the wealth building power of dividends and especially reinvested dividends. I’ve listed here the 10 year returns past 10 years on a ten thousand dollar investment with dividends reinvested.

Tom [00:13:57] Now the S&P over the same period that about thirty seven thousand, ten thousand would have grown to thirty seven thousand. These are some household names, Home Depot, McDonald’s, Pepsi, Visa, Intel. You can see Home Depot did great. McDonald’s about what the market did.  Pepsi less, Visa did great, Intel a little bit more.

Tom [00:14:18] But these are leaves your serious returns. It was a decent 10 years in the market, but you can easily beat that without risking your shirt to do it. And if I average out all these returns, it would be about 10000 would be worth about sixty six thousand. Now, maybe that that’s extra good over these past 10 years of a bull market. But you can see how you can get someplace. You can see how you can drive that retirement account toward something much more highly value that can take care of. Now there’s a new service, Cabot Income Advisor. And while the dividend stocks in Cabot Dividend Investor are great investments. A lot of people may be at a point where they just need a higher level of income. I mean, you have to compensate for all the low rates elsewhere. And even if you don’t need that high level of income, which in this case will try to deliver you a double digit annual return. At least part of your money probably does. And while I generally say Cabot Dividend investor for for Total Return, Cabot Income Advisor for income. That’s under normal circumstances.

Tom [00:15:39] If you get years of a flatter down market, you may get a higher overall return from Cabot Income Advisor. And I want to go into just a few of the ways that it’s going to generate income. One is through dividend stocks, which, as I mentioned before, because of the market sell off, there are some of the best dividend opportunity I’ve seen in a decade – since 2010. You have to be careful. But if you know where to look, there’s great opportunities. There’s also certain classes of securities that typically pay a much higher income. And these are different classes of tax advantage securities now because of desirability in one way or another, whether it’s to encourage the development of natural resources, to invest in up and coming smaller companies, what have you, these classes of securities have been incentivized with a tax break in that they pay no taxes at the corporate level, provided they pay the bulk of their earnings to you in the form of income. The income tends to be higher because they’re paying money that’s normally lost to taxes.

Tom [00:17:01] And master limited partnerships. These can include many different things, but primarily most of these companies are in the energy sector involved in the exploration and production of oil and gas piping and storage, refining and marketing. And the index, which measures it as the Alerian MLP ETF. Now, it says it currently yields seven point two percent. That’s off. It’s higher now. Sorry, but it’s a little over 10 percent right now.

Tom [00:17:41] Then there’s real estate investment trusts. I mean, real estate’s typically a great investment, but it can be a bit of a hassle to find investment properties, haggle with the seller, find tenants, maintain the building, be a landlord. REITS you can invest in real estate with one simple liquid investment and has typically been a phenomenal asset class. And then finally, business development companies.

Tom [00:18:12] These are startup companies that are underserved by traditional banks because bankers don’t really know much. And it takes some research and you have to investigate these. And there’s companies that do specialize in this and they are business development companies. Some of them are fantastic. But you have to know which ones. That index is also currently paying a little over 10 percent. Again, huge yields out there.

Tom [00:18:41] Another method toward capturing high income is dividend capture. Now you can own a stock for a day and still qualify to collect the quarterly dividend or the annual dividend, however, often it pays by purchasing it before the record date. And holding it for that date. I will do mostly that because as I’ll I’ll say in the next slide or two, when I write a covered call on a position, I will probably look out six, five, six, seven weeks. And there’s always a risk that that stock gets called away. I’ll make sure you get a dividend usually. But there’s also companies that pay once in a once in a while, a special one time dividend. It’s a special thing. And when those rare instances occur, I’ll look to take advantage of that.

Tom [00:19:39] But really, the main income advantage will be covered call writing.

Tom [00:19:44] And this writing really means selling and calls our options on stocks. It sounds complicated, but actually it’s a much safer way to invest. And it’s a great way to generate a higher income. Now, a call represents the right to buy a stock at a higher price in the future. And the reason for that is let’s say you own a stock at 48. And you think it’s going higher for a fraction, a small fraction of the stock price you can buy a call option for, say, 50 dollars in the future. If the stock goes up to 60, you get most of that appreciation for a very small investment. And you’re betting that the stock price will rise. However, over 80 percent of options expire worthless. They don’t happen that much. What we’re doing is not buying options, which is more speculative. We’re selling them backed by a position in the portfolio, which makes it a covered call. It’s sort of like being the house instead of the gambler. Gamblers. Yeah, they can win sometimes, sometimes they get hot. But they usually lose. I mean, look at Las Vegas. The whole city is built on gambling losses. It’s going to be the house. And by doing this strategy where you sell a call on an underlying stock position. Because if the stock rises above the price on which you wrote the call, the strike price, it can be called away from you. You sacrifice potential appreciation for income. But it’s safer than just owning a stock because you get a higher return writing the call than you would just owning the naked stock. And it can dramatically enhance the cash flow you get. And I’m going to walk you through an example. This is a call that was actually written on a stock in the portfolio since the newsletter came out on July 2nd. This was a stock that was purchased when the newsletter came out at about ninety dollars a share. We then wrote a call on that stock position at a strike price of ninety five dollars a share to expire July 17th. Now, let me walk you through why that’s a good income investment. All right. So we have the stock, we wrote the call on it.

Tom [00:22:26] In this case, I got three dollars and 10 cents for the call. People who received the notice probably got closer to four dollars. But we’ll keep three dollars and 10 cents. So, OK. You have this stock in the portfolio. You wrote the call. Three basic things are going to happen. The stock price is going to go up beyond the strike price. It’s going to stay around the same or it’s going to go to. Let’s cover each. Let’s say the stock goes above ninety five. You wrote the call premium at three dollars and 10 cents. You also get a dividend capture because between now and July four, 17th, when it expires, the stock pays a quarterly dividend of a dollar twenty three. You bought it at 94. It goes to ninety five and it’s called away from you. You get that five dollars of appreciation. All totaled nine dollars and 33 cents. So that will be made a total return of ten point three, seven percent in just six weeks.

Tom [00:23:30] Not bad. Now, let’s say the stock price stays the same.

Tom [00:23:36] You keep the call premium. You keep the one twenty three dividend for a total of four dollars and 33 cents or four point eight one percent on the stock and just six weeks. And this illustrates how we’re able to generate double digit returns over the course of a year. Now, of course, if the stock price declines, it’s a similar issue that you have when holding any stock and the stocks in this portfolio were chosen with that in mind. But you’re down less four dollars and 33 cents less than the stock price has gone down because of that call premium and the dividend. The Cabot Retirement Club is for people who are subscribe to both Cabot Dividend Investor and Cabot Income Advisor. Two sides of the coin, appreciation and income, and with it comes a monthly briefing on video where I will walk through the month’s activities, what to expect, but also you are entitled to tune in, watch it and ask me any questions. Real time. Of course, you can ask me questions anytime. Tom@CabotWealth.com. But here you can sort of appreciate – participate in the video call.

Tom [00:25:14] As I mentioned before, we have some of the best high yield opportunities in a decade out there. And I want to show you two of them. One is Altria. Cigarette company Altria. Used to be Philip Morris spun off in two thousand eight. That sells just domestically. They have other business, but mostly it’s about Marlboro. By far the most dominant brand of cigarettes, better than 40 percent market share in the country.

Tom [00:25:43] The yield on the company is 8.5 percent. Now, when you see a yield like that, the first thing you need to say is, is it safe? Is that real? And I think it is. Here’s why. Cigarette smoking is declining because in case you haven’t heard, it’s bad for you. And it’s been declining at about four percent per year for the last several decades. Altria has been able to make up the difference by raising the price of its flagship brand and buying back shares. Lately, however, the volume slippage increased from about four percent to about four to six percent per year. And the main culprit, e-cigarettes. So what is out for you? You went out and bought the biggest, bestest e-cigarette company called Juul. In late 2018, which has been a nightmare since they bought it, because Juul has been under attack from the regulators, primarily for marketing to young smokers and under at age smokers. But here’s the thing. If e-cigarettes have a problem and they’re sued out of business or into much less prominence well people smoke more. If not, Altria owns the most dominant brand. So it’s got ’em coming and going. And despite all these crazy headlines, the company continues to grow earnings. It also has a 50 year track record of raising the dividend every single year. If you include its tenure as part of Philip Morris, and it also has more than enough, easily enough free cash flow to pay the dividend. So there’s really no reason why they would have to or why they would choose to cut that dividend. The stock price is depressed because they’re overestimating this disaster from Juul, which they’ve already mostly written off. So you get a good cheap stock and a yield that’s very safe.

Tom [00:27:54] The other one is Enterprise Product Partners. This is a massive energy infrastructure company. Now the United States is currently undergoing an energy boom. The country went from being a marginal producer late last decade in 2007 and eight being the world’s number one producer of oil and gas. But of course, the energy industry is taking it on the chin with the corona virus shut down as demand for for gasoline and fuel and crash as the economy shuts down. But that’s not to last. And it’s very important to realize enterprise is not susceptible to commodity prices are not dependent on the price of oil and gas. They really make money by the fact that oil and gas goes through its system. They pipe it and store it and process it. And I don’t know about commodity prices, but as soon as the economy starts up, the oil and gas will start flowing again. So it’s got a resilient, fee-based based business. Nine point one percent yield, and I think it’s rock solid. First of all, the company since its IPO in 1998 has raised the dividend every year, including in bad times like the financial crisis. And the oil price crash between 2014 and 2016. It has one of the lowest payout ratios in the industry, 60 percent of earnings. And the primary reason for that is so they could you retain that money to invest in growth projects and not have to borrow money. But they’ve since for the duration of the crisis, suspended those growth projects. So they will earn more than enough to cover the dividend without investing in them. It’s highly unlikely that the income is going to fall even in the worst quarter to as much as 60 percent of what it was. But even if that happens. The country, the company has six point four billion in cash from which to pay four billion in annual dividends and the will to keep the track record going. So you have a stock that is temporarily depressed, paying a massive yield that’s safe. And these are two good places to get a yield out there. So there’s tremendous opportunity, as I’ve mentioned, in this market, both with appreciation, with Cabot Dividend Investor and with income, in which case you can generate a double digit income. And the opportunities for that are better than they’ve been in a long, long time. So with that, I’m going to turn it back over to Chris.

Chris [00:30:46] Yeah, thanks, Tom. And I’m gonna give Tom a minute just to catch his breath before he starts answering some of your questions. I see we’ve got some rolling. In the meantime, as Tom mentioned a minute ago, Cabot Retirement Club is our newest service, and it includes, as Tom said, a subscription to both of Tom’s advisoriess, Cabot Dividend Investor and Cabot Income Advisor. And for those of you listening today, we have a special offer exclusively. It is today’s listeners. You get $500 off the normal price of a yearlong subscription, which is basically half the usual price. And when you subscribe to Cabot Retirement Club, where you get are monthly subscriptions to both Cabot Dividend Investor and Cabot Income Advisor, weekly updates and text alerts, access to the Web site, which includes all back issues, updates and the portfolios. A monthly live webinar featuring Tom, like Tom mentioned, and direct email access to Tom for any questions you might have. To capitalize on today’s special half price offering and get 500 dollars off. Go right now to that site on your screen – cabotwealth.com/webinarspecial. All right. Now let’s get to your questions. Let’s see. Steven has been waiting very patiently. His question is of the top dividend paying stocks. Which ones, Tom, do you think have the best chance of coming up with a viable vaccine against Covid 19?

Tom [00:32:19] Oh, all right. It’s tough to predict this drug stuff, which will have the best. I mean, there’s a number of companies working on it. One of the positions in Cabot Dividend Investor, AbbVie, has thrown its hat in the ring and it is working on one of those. Eli Lilly is another strong possibility for it. And then there’s some other smaller, more speculative companies who probably aren’t real dividend payers. But for the dividend payers, I like that that are doing that. I would say Abby and Eli Lilly.

Chris [00:33:02] Good question. Let’s see. Question from Kumar, who asks, “Tom, can you please tell us how the covered call method that you mentioned earlier scales for a portfolio of fifty thousand dollars versus five hundred thousand dollars? Do you buy more options of the same for a bigger portfolio?”

Tom [00:33:24] Yes. What I recommend doing for the most part. Is, you know, a call represents a hundred shares. So if you have 500 shares of a stock, I would recommend writing five calls. If you have a thousand ten. And whatever commensurate with the size position you have.

Chris [00:33:54] OK, let’s see. Question from Julio, Julio asks, “What is your holding period for your two high yield stocks? Are these stocks forever? Do you highly consider technical analysis and your picks or mainly fundamentals?”

Tom [00:34:11] Well, I do consider technical analysis, but mainly fundamentals for a strong reason. Because if you’re in and out of a stock very quickly, it sort of negates the point of a dividend. You really want to collect it for a while. They’re not necessarily forever stocks because things change and the two that I highlighted are very cheap right now and have high yields right now. Over time, that could change. But they’re good for now. The period, it’s not going to be forever, but much longer term than some of the other more aggressive trading services would be. I’m going to opt to hold it longer rather than shorter unless something comes up or the technical analysis is screaming in my ear.

Chris [00:35:07] OK, let’s see. Question from Bukola. Hopefully I’m getting that name right. He asks, “What’s your take on MFA Financial as a REIT option, looking at their current knockdown price?” It’s a small cap stock, it looks like.

Tom [00:35:27] I haven’t followed that one. I’d be happy to take a look at it and get back to you with a more thought out answer. But I don’t I don’t follow it, so I don’t really have a good answer.

Chris [00:35:40] OK, question from Kumar again. “How many stocks would you be recommending in a year and how many options trades?”

Tom [00:35:49] Yeah, that’s a good question, and it varies a little bit with the environment. Generally speaking, I will look to have at any one given time, about 10 to 15 different stock positions in the portfolio. And I will look to write options on each individual stock probably three times a year, maybe four.

Chris [00:36:23] Let’s see. David asks, “What price point would be a good purchase for M0 and EPD, which you mentioned earlier?”

Tom [00:36:32] I think there are good price points right now. And that’s why I mentioned them.

Chris [00:36:38] OK. Yes, go ahead.

Tom [00:36:44]  Yeah. I mean. I’m not going to be in and out of them quickly. I’m looking to collect the dividend. And they’re both so depressed. You don’t have to really bottom fish for them because both stocks are trading not not that far off the five year lows as it is.

Chris [00:37:07] OK, and that that leads in well to this question. “Are you hoping to see more pullback in the market before buying most dividend stocks or is now a good time?”

Tom [00:37:21] Really good question. And there’s nobody alive who truly knows the answer to that. I’m a little cautious because I think the market went up awfully fast. So ideally, in the best situation, I’d like to see some sort of a pullback to really by aggressively getting cheap again, but selectively, there are still a lot of opportunities because as I mention, although the overall market has come way back, there’s pockets in the market that are still very cheap. So that’s where I would be focusing at this point. And. If should the market sell off – I will, you know, choose from a broader spectrum.

Chris [00:38:12] Good question. Question from Derek. Derek asks, “I have a 401k account and they don’t allow calls. Is there another way to do the investing you were mentioning earlier?”

Tom [00:38:29] Well, most self directed 401ks do allow covered call writing. I don’t think you can buy calls in there, but for most of them, you can write them. I mean, you’ll have to check for sure on your individual one. But other than that. If not, you’d have to do the covered call strategy outside of the 401k.

Chris [00:39:00] OK. There’s another market related question. “Were you surprised at how quickly stocks did bounce back the last couple days after the fall off last week?”

Tom [00:39:15] Yes. Yes, I was man enough to admit it. I mean, this market keeps surprising me every step of the way. I mean, who. I haven’t seen anything like this in decades in the business. But, yeah, this seems to be a market that just wants to go up unless it’s really discouraged from doing so. But I was a little surprised. I thought we would get a little more of a sustained pullback. But they got good economic news right away. Encouraging news on a treatment for Covid right away and that completely stopped the slide. And here we are again. So, yeah, I was a little surprised, but, you know, we’ll see what happens from here.

Chris [00:40:05] Here’s another interesting question from Kumar. “401ks like Fidelity won’t allow MLPs in them. Basically anything that issues a K-1. Do BDCs issue K-1s instead of 1099s?”

Tom [00:40:26] I think so. I think there is an issue there now. But what I would encourage you, I don’t currently have any BDCs in the portfolios. And if you go to, I think, the September issue, I highlight MLP alternatives if you can’t hold them in your account. These are stocks involved in the same business that do the same things that you can also invest in if you can’t buy an MLP. Take a look at that. But by all means. Email me and I’ll go through it with you as well.

Chris [00:41:09] OK, I think we have time for one or two more questions. “What sectors do you think are most ripe for dividends right now?”

Tom [00:41:22] Ripe for dividend. I’m not sure – I mean, paying the highest or?

Chris [00:41:28] Yeah, I guess I assume that’s what it means.

Tom [00:41:32] Well, yeah, I would say the sectors that are most beaten up and I highlighted two of them. In the presentation, one is the MLP energy sector, which the index – the index of 20 something individual stocks is yielding over 10 percent. So it shows you how the yields are there. And also, BDCs currently – that index also yielding over 10 percent. And that’s probably the highest. The typically other high yielding regular dividend stocks, which include utilities and REITs and things like that. They’re not as high yielding because they haven’t been nearly as beaten up. But energy and finance are really the big sectors to look for the highest dividends right now. But you need to be careful.

Chris [00:42:31] OK, I’ll give Kumar the last word is he’s keeping them rolling. The question is, “Do you mainly use individual stocks or ETFs?”

Tom [00:42:41] Individual stocks. I mean, I don’t rule out using an ETF, but I would seldom do it. Maybe if there was an opportunity in a foreign market, it might make more sense. That could be the case. But right now, no, individual stocks.

Chris [00:42:59] And you have a couple bonds in Cabot Dividend Investor, right?

Tom [00:43:03] Still, yes. Yeah. There is also. And one thing I want to point out, I do have some bond opportunities for for the safe part, for the least volatile part of Cabot Dividend Investor to balance it out for people who also want some of their portfolio out of regular stocks just for security and for allocation. But I wanted to point something out that when you have – when we look at how we get a high income and I point to Off the Radar Securities, MLPs, BDCs, other things, high dividend paying stocks. That’s the best place for an income now. And that is. And should be the case for the foreseeable future. But as we’ve seen over the past few months, things can change in a hurry. And if we get to a whole nother environment where we have inflation and high rates again. I will simply adjust for those income opportunities. You know, if we were ever to years from now be in a similar situation than we were as we were in, say, the nineteen seventies, perhaps a lot of this portfolio would be in bonds and related securities. If that’s where the best income opportunity becomes. So it’s versatile, versatile after income and the securities of which I speak are the best opportunities right now.

Chris [00:44:49] Thanks, Tom. And thanks to everyone with the good questions today and and for joining us. We’ll be back next month with another free webinar on Tuesday, July 22nd, at 2:00 p.m. Eastern, this time featuring Carl Delfeld, who’s chief analyst of our Cabot Global Stocks Explorer Advisory. It’s titled Three Stocks for Three Blue Ocean Global Trends. So mark that on your calendar, Tuesday, July 22nd, 2:00 PM Eastern. That does it for us. For Tom Hutchinson and the entire Commonwealth network team. I’m Chris Preston. We’ll see you next time.

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