2 dividend plays, taking profits, and dry powder

0:09Always happy to welcome back David Alton Clark to the show who runs Retirement Income Warrior and who recently wrote a book called Commanding Retirement Income, book week at investing experts. Dave, welcome back to the show. Really happy to have you back on. Thanks, Rena. It's great to be on. Here we are basically in the middle of 2026. How has the year gone for you and your service? What's been going on? It's been a highly volatile year, but volatility also creates opportunity. So if you have the proper planning in place and discipline, you can take advantage of the volatility. It's been pretty crazy with Trump on again and off again, war with Iran.

0:58But we've been able to take advantage of that and actually have already gained$93 ,000 in capital income from selling stocks at their highs. I just recently took profits in four of the income growth portfolio, Meta, AMD, Amazon, and Corning. We're all up 20 % to 40 % at their peak just recently. They ran up really quick. One of my rules is that if you, the faster it goes up, the faster it can come down. So I actually added those at the lows we just had about a month ago between February and March. Those are four stocks I added into the growth portfolio, which is really the portfolio where I harvest the capital gains from there and then redeploy that into the income side of the portfolio.

1:50So that's really the purpose of that portfolio. And when I have stocks that run up 20 and 40%, AMD was up 40 % in a month. The other three, Corning, Meta, and Amazon were all up 20 to 25 % just in this last month. So just recently, I took profits on all of those. And so that worked out really well. But I'm not really sure what's going on right at this exact moment. I'm kind of holding steady and telling everyone to, you know, strap themselves in because who knows what's going to happen over the next day or so. Right now, I haven't allocated all of that money. I still have a lot of dry powder. I think at the time before I took profits in those, I was 72 % allocated, and now I'm down to 58%.

2:37So I have a large amount of dry powder ready to go right now. I did buy one thing, ConAgra, which is kind of a point of max pessimism buy. They've paid a dividend and never missed it since 1976. It's$1.40, and their stock has dropped significantly down over the last year to where it's about$14 now, I think. So the dividend yield has gone up to 9%. So it's one of those dividend capture deals where the stock has gone down so much that the dividends rose risen higher than it normally should be. So I locked in a position on that, just a half a position right now. 4 % is a full position for me. So I bought a 2 % initial position and I've got 2 % back up in case it goes down more.

3:34If it starts to run away, I'll lock in the rest of that. But locking in that 9 % gain on a company like Conagra that's faithfully paid the dividend since 1976, and then they just had earnings. And every one of the management team was stated that they're dedicated to paying the dividend, and they're not thinking about a cut or anything like that. And they actually still have about 75 % payout ratio. So they have coverage on it. So they've still got a little bit of cushion there. And as of their last earnings report, things are looking like the strategies they've implemented to make a comeback seem like they're taking hold.

4:18So I took a shot on that one. It's not, you know, that's a little bit of a higher risk one, but it's a nice dividend to collect on that one. Do you want to get into more detail, if you would, about A, what are the strategies that they've been implementing that seem to be righting the ship? And also, why is it a higher risk play? Well, the strategies they're implementing, they're in the food business, and that's kind of shifted a little bit lately with the GLP-1 meds and things like that. People are eating differently in the different categories. So they've really taken a look at that and changed up their category, their food offerings in the different categories to where they include that.

5:04and they've done some work on the back end as far as the cost, you know, of creating all the different foods that they make. And so that's really what they've done, cost reduction and avoidance. And they've also expanded their different offerings to take into consideration some of the changing dietary likings of the general public right now. So they've kind of shifted away from some of the more high fat, sugary foods to more healthy foods and things like that. So, and it seems to be working. They're all, they're up like 2 % across the board on all of those things. And you asked what makes it risky?

5:48What makes it risky is that, you know, they do have 75 % payout ratio. The yield is 9%. They are really down at the bottom. Technically, this is what I call a point of max pessimism buy. So they have bounced slightly off the bottom of the downtrend channel. This is from a technical perspective, which creates some of the risks. They are in a solid downtrend channel for probably the last year. But the stock just recently bounced off the very bottom of that channel and popped up a little bit. But it hasn't made a total complete trend reversal yet. And that's really, if that occurred, I would say it was less risky.

6:33But I wanted to take advantage of getting that 9 % yield. So I went ahead and bought it when it just barely moved off the bottom of the downtrend channel. But right now, it's still the momentum is against it as far as there could be further down draft selling. But I just said that's why I kept two percent in reserve to take another shot at it, fire another bullet at it if it does go lower. But that's why it's still risky. And plus the food business, there's a lot of competition. They're doing really well, but there's, you know, there's a generic brands now. There's, you know, just the food, you know, grocery businesses is super hyper competitive.

7:16And conversely, what would you say about the four names that you took profits on? I know that you said that they had a price run up. What other factors played into that? That's a great – I'm glad you asked that question, Reno, because what I told my members is that this wasn't a selling of these stocks based on the long-term growth story changing. I still believe in all four of the stocks that I sold in the long term. But the issue is that when I've seen this too many times before in my history, where if something runs up 40 % in less than a month, and then the rest of them like 20 to 25 % in less than a month, it's very easy to see those.

8:05It's kind of like hot money in a way. And you can see those gains evaporate quickly on headlines, macro headlines, like the whole problem with the Iran war and Trump. If Trump and Iran or the U.S. and Iran don't make a deal by tomorrow and we start bombing Iran again, I'm thinking the market's probably going to drop again. And maybe I'll get another chance to get back into those at a lower point. but also they're in the portfolio, the growth portfolio, which I call the income garden. So anytime one of those, you know, I have a moonshot portfolio also for growth. And those are ones where I don't take profits on those.

8:52Like IONQ is in my moonshot portfolio and it was up 60 % just last week. But I didn't sell that one because I'm expecting that one to be a multi-bagger, maybe 10 times higher or whatever a few years out from now. So that's one where I don't touch those. But ones in the income garden growth portfolio, when they eclipse the 20 % mark, that's when I review the situation and say, okay, what am I going to do here? And then each one of those ran up so fast. We had a V-shaped recovery. The stock market went down by about 20 % or whatever on all of these stocks were trading 20 % off their highs or more.

9:36And then just this stock market in the beginning of April just shot right back up to where it was before. And so when I looked at all of those, I decided I'm going to go ahead and take profits on those. And then I'm sure with all the volatility we have. And then another factor that came into the fore was that we're in a midterm year. And that's coming up pretty soon. And usually that brings on a whole nother layer of uncertainty and volatility because of all the political headlines and back and forth. And you don't know who's going to win and will the policies change. And so I'm expecting another series of volatility and downturn as far as that goes.

10:21But those are ones that I would still joined back into. It wasn't because I thought that they actually, you know, their long-term growth story changed. And I also, that was just recently, earlier in the year, I was, I think last time we talked, I told you that I loaded up on energy stocks because I felt like energy was going to be big this year. And I had no idea that this is what was going to cause it, you know, But it was really such a negative narrative on energy coming into the year. And as we've discussed many times before when we talk about ExxonMobil, the thing is the seeds of the coming boom are sown during the current bust, is my statement on that.

11:10And it's cyclical oil. So I bought into a lot of oil stocks. I had Chevron, Oxy, EQT, Valero, EPD, you know, in each of the different categories of oil and gas. And when the war kicked off, all of those spiked up huge. And so that's kind of what created a lot of the profits at the beginning of the year because I sold out of those earlier, too. I still have some oil exposure in ETFs and like AMLP, but it's much reduced right now. To the point of how the market has been moving and it's hard to assess, even though, you know, you've talked before about what your strategy is. And to your point, sometimes the strategy pays off in ways that you couldn't even predict.

12:02But has there been anything about this evolving market and the evolution of investing in general that has caused you to rethink or tweak anything in your strategies? That's another great question, Rena. I didn't think about that. Maybe tweaking some because we are in a highly volatile market right now. And so for the last 10 years, from the great financial crisis in 2008 to 2009, all the way to 2020, money, it was really easy to make money. I mean, there was zero interest rate. You know, remember the ZERP policy? And I think, you know, I made a lot of money during that time, but I think a lot of other people did too.

13:00It was pretty simple. You really knew what the Fed's policy was going to be. And, you know, anytime there was a pullback, it was buy the dip and you're going to you're going to be a winner. So I think a lot of, a lot of, a lot of people got, we were a little overconfident, you know, at that point in time thinking, man, I'm a, I'm a stock market genius, you know, and I'm not saying they weren't, you know, but I'm saying it was a little bit easier to, to make money then once the, once the pandemic hit. And then we had, we just had a series of, of, of huge macro issues that you've had to be able to navigate.

13:41Luckily, I learned a lot previously. My experience goes all the way back to the dot-com boom bust. And then, you know, I was actually out in Silicon Valley at that time. And so I was like, I feel, I call, I give it like I had the Icarus type experience. I was flying really close to the flame to the sun of that. And so I learned a lot from that as far as navigating these big macro issues. And then the same thing with the 2008 house of cards falling. I was actually in real estate at that time. And so I was lucky to be right there. So I think the strategy's changed from the last 10 years, which has been pretty simple, that there are going to be zero interest rates to now, uh, it's a little bit more, I'm a little more active than I used to be.

14:35As far as these buys and sells, uh, I usually, I would be holding them for longer, like AMD during that time. I bought AMD, I think back at like for$3 and something in 2011 or something like that. And then I let it ride all the way up to 140. It was like a huge winner for me. Uh, but now I've changed my strategy with so much volatility. And I'm getting older now. And so I'm really more about harvesting income, harvesting the growth capital appreciation and redeploying it. So that's really what's changed. But recently, I would say that I'm a little more focused on taking profits when I need to.

15:20And also, I've shrunken down my shot group. That's one of my rules of during volatility. So I'm glad I finally thought of that when I was rambling on. But in times like this, I think it's important, you know, it's good to be diversified. But when things are so volatile like this, you really need to take a look at your holdings and maybe trim away the ones you're not so sure or convicted in and focus in more on the ones that you have more conviction in and a higher, you know, you feel like they're going to do better. So So right now I've got 22 total holdings across the portfolio when normally I might have more like 30 or something like that.

16:04So I've kind of trimmed them up and tightened into just my highest conviction names. I know people love to hear about the returns. Would you be willing to discuss some of the returns that you've had at Retirement Income Warrior? Like general performance? Yeah. As of right now, well, we've got a total return of 101 % right now since we started the service in June of 2022. It equates to about 26 % total return per year. That is built on, we've had$502 ,000 in income coming from distributions, dividends, and interest. and then 479 ,000 has come from the harvesting of capital depreciation sold securities.

16:53Over this last, and not everything is a winner. So we have a 51 % capital gains level right now since inception. But just for 2026, I've got my list of all the stocks I sold. And so I've taken profits on some Amazon. I took profits. It was up 23%. Corning was up 22%. AMD was up 40%. Meta was up 23%. Now, one other thing we haven't talked about yet is the narrative on BDCs and private credit. That's been a big issue lately. and I had a couple of names that were involved with that. BizD, USA, OBDC. I actually took losses on those. BizD, I sold out of that one at 19%. It was a$12 ,000 loss, which you can use for tax loss harvesting against your gains.

17:57So it's kind of a tax loss harvesting thing. But also on that one, I'd collected like$30 ,000 worth of distributions already. It was something I'd held for a long time. So all of the ones that I sold in the income side, I took these losses of $6 ,000,$12 ,000 on OBDC, but I had huge income from those and I didn't want to see that completely evaporate. And those are ones where I felt that that narrative had shifted. I still felt great about those companies. They were best in class. But sometimes even if you feel that way yourself, if the narrative is so pervasive, you might want to say, hey, let me just cut out of these, use it as tax loss harvesting, and come back and take another look at them once this is over.

18:53so those were some of the some of the losers uh those were the three or four the four that were down for me were bizd usa obdc and uh actually sold out of salesforce too when i kind of bought into that you know how it's been ai versus the software companies and and uh salesforce crm was just beaten down i think it was down like 50 or something like that so i kind of took a flyer a point of max pessimism, uh, buy on that at one point. But once it hit, you know, when I buy something like that, I watch it at every percentage. Like when it's down 10, if it's down 10 % or up 10%, I double check it.

19:37Same thing, every 10%, 20%, whatever. And so it was down 10 % from the time. And I only started with a half a position and it was down 10%. And then I just reevaluated it. And I thought, you know, maybe I entered in a little too quick. So I went ahead and sold out of that one too. But overall, we're up 10 % in capital appreciation for this year, 93 ,000 total, including all the gains and losses. We had Samuel Smith on from High Yield Investor last week, talking about providing some context about the private credit sector. And his pick has been Blue Owl Capital, not necessarily for this year specifically, but his pick at the beginning of this year.

20:15And he was saying that the fears about that space, kind of what you were saying, are overblown. Anything else that you would add to that conversation about the private credit space? Yeah, he's right on that. And the Blue Owl Capital, it's really those people get confused between the public companies and the private companies. The Blue Owl Capital's issues are with their private credit where the people are asking to get their money out and they have a rule where You can only get 5 % out a month. But I think Blue Owl actually said, okay, and they sold off some assets and gave people back like 40 % for what they're asking for.

21:00And if you really look at it, I'd have to check it again. But I did check that out back in the day when Blue Owl was really in the headlines. And I think that was really the one fund that was being, if people wanted to get their money back out of, was only 2 % of their total earnings or their total assets under management. So it really was kind of a misnomer to think that the Blue Owl was going to have trouble. There are some great ones out there. Like if I was going to go back in, I'd probably go in with something like Blackstone, I think, is on top of that. And they had a lot of redemptions that people were asking them for redemptions.

21:43But I think it's more of a situation where the investors in those didn't really understand the rules that those are hard assets and they're not liquid. And so it's not like you can just go in there and say, hey, I want my money out of there. Well, they have to sell something. They got to sell some condominiums or sell an apartment complex or something to get the funds out of those types of entities. So I really think it's just everything's kind of coming back now, too. And so I think it was just I don't think it's going to be the same thing as like the great financial crisis. What I told my my people was it reminds me of the when we had remember we had the issue with the regional banks a while back when one went bankrupt in California and then one went bankrupt in New York.

22:40And then people were like, oh, my God, you know, the regional banks are going under and the whole regional bank sector just took a dive bomb. I feel it's kind of a replay of that where there was a few issues, people wanting redemptions from Blackstone and Blue Owl, and then it's kind of blown up into something bigger than it really is. So I think it's going to be fine. And I do still have some income stocks that are, you know, adjacently related to that. And they've all made pretty big comebacks that were down before bigger. But now they've all come back to less than down 10%. Do you want to say some of those names?

23:23One is, this is something I'm getting ready to write an article on, but I'll give you my top income pick that I feel is the best of the breed in the higher yield sector. It's Starwood Properties. It's an MREIT. Barry Sternlich runs it. I've owned this forever and it has right now it has a 10.47 % yield it's trading I think I didn't look just today but around 18 but it's it's actually highly diversified and it was down along with all the other stocks that are kind of involved in the real estate sector and the private equity. But Barry Sternlich, I've been around a long time, so I'm going to kind of date myself here.

24:20But back in the day when the credit, I don't know if you remember the credit union crash or whatever of 1982. I don't. I'm very young, Dave. I'm very young. But in 1982 was really the first commercial real estate, you know, just debacle, you know, from the credit unions were just, giving away money and not doing enough risk assessment or whatever. And the whole thing came crashing down. And they created something called the Resolution Trust Corporation, where the government, all these commercial real estate buildings all were bankrupt. And so they had to create a government entity to sell those for pennies on the dollar.

25:03and I really remember because I was just in the middle, I was in college and I was dating a lady that was actually working for Ernst & Young and she was working with the Resolution Trust Corporation and she was telling me all about it and how all these big buildings on the Riverwalk in San Antonio were selling for pennies on the dollar and she kind of explained the whole thing to me. I was like, wow. But Barry Sternlich, that's when he started his own company. He was working for another real estate developer, but he went out on his own at that point in time and bought up some of those buildings for pennies on the dollar.

25:44And then later after that, he started Starwood Properties and started paying a dividend. And one really great fact about his company is that it's the only MREIT in history that has never cut the dividend. So that's really important. And he had to go through the 2000.com debacle, didn't cut the dividend. He went through the great financial crisis, didn't cut the dividend. And he is just over and over stresses the fact that you can count on that. Now, he hasn't grown it. It's 48 cents a quarter. And he's not growing the dividend, but you can count on that 48 cents. And it's 10 % yield right now.

26:40And it's highly diversified. They got a great balance sheet. That dividend right now actually isn't covered by income coming in, but he's got so much money and so much diversification that it's not a problem for them to cover the dividend. and the whole situation is looking up for them right now. So Starwood Properties is my top pick for that. And I'm getting ready to do an article on Seeking Alpha about it shortly. I appreciate that. What would you say has enabled them to not cut the dividend? Is it the fact that they haven't grown it or what else would you attribute that to? And what would you say are, if any, what concerns you have about Starwood?

27:27You know, sometimes diversification of income streams can also, it can be a big positive, but it can also turn into a negative. So they're not your standard MREIT, you know, getting income from just one source. They've got, he's expanded, he has several different vehicles that he can get income from. I'm not concerned about him cutting the dividend because I think they got$1 or$2 billion in cash and cash equivalents that he could always use to pay the dividend. Plus, he's got a massive credit line. So there's no issue with liquidity with Starwood. So the dividends may not be covered by the quarterly income that they have coming in, which is probably almost covering it, but it's not 100%.

28:21But that small percentage or whatever that it's missed by, they're just, you know, he's been going for, like I said, since 1982. So he's got billions of dollars and huge credit lines. And so that's why I'm not worried about the dividend. And the risks are that he is, he does have, one of the non-risks is that he's not highly focused in on like apartment complexes and office, you know, which is the office space. Office buildings are kind of under attack right now because everyone thinks that AI is going to delete those people's jobs that go to a building and sit in there in front of their computer.

29:07in their cubicles. And so a lot of people are really worried about office buildings right now. And so he's really stayed away from that. It's a very small percentage of the portfolio, I think less than 10%. And so he's done a good job of focusing in on that. But also he has a lot of different diversified areas of income, which can also be an issue at times with something seems to fall apart. It's kind of like the conglomerate thing. Like what happened to GE when they were a big conglomerate and they had all these different branches and companies and it just like one was up. It was like the thing where you hit the little head off the guy, whatever.

29:51One would be up, the other would be down and you never could make it go. That's kind of one of the risks with Starwood too, but he's been handling that pretty well is also can't remember what that game is whack-a-mole whack-a-mole that's what it is yeah it's kind of it's got that's one of the risks it could be a whack-a-mole situation but i don't really think so that ge was definitely whack-a-mole i can't believe you thought of that any other whack-a-mole's in the income investing space or the opposite of a mole any any uh what what else are you looking at in the income space? Bonds, anything to say there?

30:27I want to, I want, you know, yeah, one thing about the bonds we talked about last time. So I do have, you know, as far as income goes, I like to have some different diversification in the different vehicles. And one of them is for actually for bonds. I'm not really a bond expert. So I like to outsource that to the specialists. And so I have a investment in the bearings global short duration, high yield fund, and it's a closed end fund and it yields about 10%. And the thing I like about that is that it's got high current income while it preserves capital because it's, it's, it's only short duration, less than three years, which reduces the interest rate risk.

31:18So that's how they stay short. And it's spread out across different geographies, US, Europe. And so that's really where I've got the bonds concentrated. One thing that I wanted to say that I'm glad you brought that up is I've decided that I'm no longer going to invest in MLPs that create a K-1. It's actually a partnership. And I know that Samuel Smith, he invests a lot in the MLPs. And after considering it, I'm going to invest in, I've got a MLP, which is an ETF, which has a bunch of MLPs within its portfolio, but there's no K-1 tax form that you have to fill out. It's not a partnership. So you can gain exposure to MLPs by using AMLP, which is one of my holdings, and then skip the whole tax burden.