Untouched by Plunging Markets (8.7% Yield)

[@armchairincomechannel]

➡Snowball Dividend Tracker (Create a Free Account, and the 10% Discount will appear under "Subscribe"): armchairincome.link/snow

[@ciprodriguez]

I can't read your description on mobile it's greed out

[@txbgould]

Another great video. You always bring my attention to tickers that I have not heard of before.

[@armchairincomechannel]

Glad you like them! Thanks for being one of the first to watch...and comment :)

[@TheMally85]

Thank you Mr Armchair!

[@armchairincomechannel]

My pleasure!

[@Jon-s8q]

Another really excellent video focusing on a single point. Thanks very much.

[@armchairincomechannel]

You're most welcome. Thanks for tuning back in :)

[@mikamika4369]

Thanks for the video. I bought FSCO, JBBB and JAAA some time back and I am happy with the return! Happy New Year!

[@armchairincomechannel]

I'm happy with those 3 too! Happy New Year :)

[@surelywoo]

Thank you sir! I bought some CLOZ after one of your other videos. You have become one of my favorite investment channels.

[@armchairincomechannel]

Glad you like them! Welcome to the Armchair Community :)

[@enricomonesi5856]

Certainly something to have on my to buy list.........HAPPY NEW YEAR........oh, and of course, happy investing 😊

[@armchairincomechannel]

Happy new year! Thanks, as always, for watching and for commenting on so many videos :)

[@peoriaos6627]

Awesome video. Thank you as always. You have the most useful investment information on the utube.

[@armchairincomechannel]

That's very kind of you! Glad it was helpful and thanks for your encouragement. It is motivation to make more videos :)

[@jijiipetti1433]

Excellent video! As always, you answered several concerns and questions I had with CLOs and Preferreds that have not been quelled by several other sources and others I didn't know I had! Also, I really appreciate your sharing the reference on Preferreds and in general. It's a real added value to the position information!

[@armchairincomechannel]

Glad you enjoyed it! Thanks for your feedback. I'm glad that you found value in the information. I figure if its interesting to me it might be interesting to some other people too :)

[@momdittomomditto7705]

Thanks again for another informative video. I look forward to the Sunday drop. Happy New Year! Hope it is prosperous and healthy for you.

[@armchairincomechannel]

Thank you and best wishes for a healthy and happy 2025 :)

[@michaelaiello7894]

CLO AAA debt is a very strong option that is comparable Treasuries in terms if risk. I believe I have read in several places that there has not been ANY defaults in the CLO AAA debt tranche! 10 Year Treas. 4.631% vs. JAAA TTM yield 6.39%

[@armchairincomechannel]

Yes, I think its an overlooked asset class. Short term treasuries are less risky, but given the small amount of risk for AAA CLO's, I think they're worth looking into.

[@Krautlander]

Thank you for the video. I have ECC Series D in my Portfolio. AS I'm from Germany I only by preferred with an upside amount to the 25 for currency hedging. Smal position but pays around three beers the month... :) I wish you a happy new year next week.

[@armchairincomechannel]

Thanks for sharing! Nothing wrong with free beer :)

[@davidlabate3460]

Thanks from a income seeking senior and happy New Year

[@armchairincomechannel]

You're most welcome. Happy New Year!

[@seanwilliams9060]

Thank you once again. I appreciate your thoughtful insights as I will be retiring soon

[@armchairincomechannel]

You're welcome and congratulations on your approaching retirement!

[@robertmather6152]

Another most informative presentation. Thank you

[@armchairincomechannel]

You're most welcome!

[@mlwilliams4407]

Another outstanding video...thank you. Definitely extremely impressive that JBBB and CLOZ only went down 0.06% on Dec 18th. Not sure if you picked up on these fantastic data points yet, but two of yours (and my two favorite) "fixed income" funds handled Dec 18th pretty well...EIC only went down 0.26% and FSCO went down 0.30%. More importantly, check out the total return from Dec 18th up to today: 1) FSCO Up 1.34% 2) EIC Up 1.25% 3) JBBB Up 0.42% 4) CLOZ Up 0.27% Lastly, I was unaware of EIC and FSCO until your KZbin videos so thank you so much!!!

[@armchairincomechannel]

Thanks for your feedback. FSCO is doing really well. I'd buy more but I'm already at my 5% cap.

[@Nemo-yn1sp]

Thanks. I appreciate the SA audio articles, makes me wish I could do it with more sites. Happy New Year!

[@armchairincomechannel]

It's the way of the future! Happy New Year :)

[@Nemo-yn1sp]

@@armchairincomechannel More productive but not sure how it helps my brain compared to reading. Easy to zone out to other thoughts while listening, not so when reading.

[@Optimus-Prime-Rib]

Awesome video. Already invested in them all thanks to you. This explanation was really great. Happy New Year! 🍻

[@armchairincomechannel]

Awesome! Thank you! Love your KZbin name by the way :)

[@timduffin5600]

Perhaps in a future video you could discuss the results you've been able to rely upon since you retired in 2017? I'm particularly interested in the mechanics of how you make it work, and I think others would be as well. I know you don't like showing your portfolio numbers, but perhaps speaking in percentages would still offer value? Love the channel, appreciate you sharing!

[@TroyD-vo1bz]

You may want to take a look at some articles from Steven Bavaria, and read his book "The Income Factory". He shoots for 8% average. Just be aware that even though you're relying upon dividend income as opposed to capital gains you can still get hit pretty hard in a crash. All else being equal though an income factory does much better particularly if the dividends are reinvested.

[@armchairincomechannel]

Tracking results is challenging with a constantly evolving portfolio. I started using Snowball to track my portfolio (and share it) in May 2024. Before then I just followed the numbers on 3 separate brokerage accounts. Since then I have made about 4 trades a week and reinvested a portion of my dividends every month. Not counting the reinvestment of dividends, the portfolio is up 6.7% since May, and the yield is currently 11.54%. Total return would require annualizing the 6.7% and adding the income. I don't have software that can do that for my portfolio. So no NAV erosion, but the market has been kind to us. I would like to track everything but I haven't found a way to account for my trades (realized vs unrealized profit) and I want to show the returns without reinvestment so that its a constant as I reinvest a different amount each month and that complicates the return. As the data from Snowball grows, I'll share whatever useful data I can. I think I'd need at least a year of data but ideally it would be best to see how the portfolio reacts to bull and bear markets. Anecdotally, I recall that my portfolio dropped like everybody else's in 2022, but the income hardly changed at all...very few cuts. Since then I've added covered call funds and they are likely to trend down during a prolonged bear market so that will affect future numbers. Thanks for the suggestion!

[@bethhynes787]

Excellent information- thank you for sharing!!!

[@armchairincomechannel]

Thanks for watching! Glad it was helpful.

[@edbrandt8972]

Thank you for sharing your insight on lower volatility choices that still offer good yields & total returns.

[@armchairincomechannel]

Glad it was helpful!

[@DeanPalma]

Funny, i was just wondering about which type of funds were less volatile. Thanks for the video!

[@armchairincomechannel]

Great minds think alike!

[@richarddaken6770]

Love the video.. very informative.. happy new year everyone!

[@armchairincomechannel]

Glad you enjoyed it! Best wishes for 2025 :)

[@oneeyedjack8806]

Well here we are. My MAIN has appreciated to +17.85% So like the true financial firebrand I have become, heads I sell, tails I keep. What wisdom! 😁🤑Happy New Year!

[@armchairincomechannel]

MAIN has gone from strength to strength for decades. I share your admiration. Happy New Year!

[@johnsonch7292]

Be small aware, there is so many AAA Clos funds or etfs been launched past two years and many investors does want AAA, and has caused supply and demand inbalance, AAA clos are now selling above Par. Basically above the maturity price that the lender require to pay. I would go down a few credit spread down A or BBB. Just my 2 cents, they are below par.

[@armchairincomechannel]

Thank you for sharing this.

[@3404gsharp]

Thank you for the video I actually own all four of these before I found your channel. This solidified my choices.

[@armchairincomechannel]

Great minds think alike :)

[@BenjaminHansen]

Thanks for this video.

[@armchairincomechannel]

You're most welcome :)

[@mikeconnell698]

Thanks for another good video. I have JBBB on my radar. I built a position in CLOZ now. Its latest div with an ex-date of 12/27/24 is $0.20874. That's slightly above where its TTM has been. I think the last div (12/3/24) looks like it was a glitch.

[@armchairincomechannel]

You're probably right. The distributions change every month so 1 month doesn't necessarily mean anything. I'm keep an eye on both :)

[@Ronnieleec]

Interesting. I recently heard/read about JAAA and JBBB. One or both will definitely be considered going forward. Thank you, as usual.

[@armchairincomechannel]

Glad it was helpful! Thanks for watching.

[@Steverino70]

4 Armchair Income, good video.

[@armchairincomechannel]

Thanks, I'm glad you liked it!

[@mlwilliams4407]

Oh, forgot to ask. What are your thoughts on the new Nuveen AA-BBB CLO ETF (NCLO)? It's a monthly dividend payer with an 0.25% expense ratio...and its total returns actually went up 0.01% on Dec 18th!

[@armchairincomechannel]

I'm not familiar with NCLO but its so new that there isn't any data to analyze so I'd prefer to focus on the established funds.

[@bills.1390]

This video really got my attention as I am 50% in preferred stocks, good job explaining how they work. I have AGNCN already which has been steady as you pointed out, also in my account the least volatile so far are NLY-G, SAJ, MS-F and OXLCN. My least volatile ETF is my favorite and largest fund position FRA. Thanks for all you do.

[@armchairincomechannel]

Thanks for sharing your preferred stocks and FRA. Good to know that it's volatility is so low.

[@jijiipetti1433]

I'm newer to preferreds. What is and why are we looking at series F? Thanks.

[@michaelaiello7894]

I recently looked at a handful of the CLO debt funds: Janus, Panagram, Van Eck, Invesco, BlackRock, Virtus, and Hartford. There are a couple more of the AAA funds than the BBB - B funds. Most of these funds have inception dates in the 2022-23 range, so they have some history to research. CLO debt is a bet for the corporation to survive or finish the race because they are higher in the Capital stack therefore are paid before preferred and then common stock. Janus and Invesco, and Panagram seem to have the best yields. What do you think of the comparison between JAAA and ICLO (Invesco's Clo debt etf)?

[@armchairincomechannel]

Thanks for sharing. I'm not familiar with ICLO but JAAA has a longer history and is a far larger fund. I'll check it out, thanks for the suggestion!

[@phalanxtrader]

Thanks for your video. At 0:55 you show dividends history for AGNC since 2008, your red dotted arrow make a downward projection for future distributions. Since 2021 the AGNC distributions are constant (on a lower niveau) do you think this company cuts the dividend's in 2025...?

[@armchairincomechannel]

You're welcome! Regarding the ANGN distribution history, the blue bars and the red arrow cover previous distributions only. Some charts have a light blue bar for "Forecast" but not that AGNC chart. Also, on another chart I pointed out to ignore all forecasts for dividends on all websites as they can't be predicted. I don't hold or follow AGNC so I don't know the story behind its current/future ability to pay dividends. One look at its dividend history and it didn't fit my criteria. But I do hold AGNCN :)

[@JosefTorkelsen]

I’d love for you to explain how income stocks are expected to behave in a crash and particularly their dividends/income. Does the income stay the same, does it go up or down, which ones change (covered call ETFs), etc.

[@JosefTorkelsen]

For instance, I thought covered call income would go up as volatility increased, but another person pointed out that although that is true, the stock dropping would result in the dividends dropping and that caught me off guard.

[@armchairincomechannel]

Over the short term, income would go up in a cc fund. If the correction was for a long period, the income would eventually be reduced. I'll cover it in a video later this month.

[@stevegajewski682]

is there a link to your portfolio (like a spreadsheet) ? I am looking for places to park money as the stock market could reset in the next qtr. I am researching : CLOZ, THTA, HTGC and the ones you have mentioned. - Thanks for all your insights 🙂

[@armchairincomechannel]

Yes! If you subscribe to Armchair Insider, each edition includes a link to my portfolio. It comes out monthly. Here's a link to join: armchairinsider.beehiiv.com/subscribe. Thanks for watching :)

[@Velacreations]

CLO funds should do well in a "higher for longer" environment most folks are predicting for 2025

[@armchairincomechannel]

If that happens I'll buy more!

[@Velacreations]

@@armchairincomechannel we are in the "higher for longer" scenario right now

[@leoz6338]

As a temporary holding place for cash would you prefer JAAA or a high quality preferred fund which soreads the risk so the risk of default is mitigated (dont like the NLY preferred). Love your channel btw.

[@armchairincomechannel]

Thanks for your kind feedback. Preferred funds are typically more volatile than JAAA, especially if they use leverage. Also, a percentage of the preferreds will be fixed rate which means their value changes, adding to volatility. As long as interest rates remain at elevated levels, my answer to your question would be JAAA.

[@srinip825]

Hello, why would you prefer a jaaa with 6% when pups is at 5.78 and gives rate exposure if yields move up. Welcome your input. Thanks

[@armchairincomechannel]

I don't hold JAAA but I have JBBB. Sorry, but I don't know what "pups" is so I can't comment about it.

[@BTinSF]

You have to be careful with thinly traded preferreds. I hold one that appeared to drop 15% in one day apparently because of a single trade at the end of the session (TC Energy Preferred Series 2, TNCAF). The next day it regained the entire loss as trading resumed. I suspect the anomalous trade was off-exchange and possibly even some kind of attempt to manipulate the stock. Otherwise it made no sense.

[@armchairincomechannel]

Yes, that's a good point. In the case of thinly traded preferreds its best to use limit orders to prevent paying or selling at an unfavorable price relative to the market.

[@TroyD-vo1bz]

Still recovering from the December 18th drop, so great timing for this video. And for others reading this comment, while the S & P dropped about 3% that day, most of my income factory holdings dropped between 5 and 6%. Even REIT's dropped Substantially. I'm 63, and don't like to see major drops. For that reason I still have quite a bit of money in short-term treasuries and gold. This is one person who would really like to see a major drop so we could just get on with normal investing without the worry of the everything bubble popping. I watch a lot of interviews with Adam Taggart of Thoughtful Money and I'd say about 80% of the macroeconomist he interviews are predicting a major crash in 2025. The overvaluation in the market cannot be understated. All it takes is a sentiment shift to cause a panic and a major sell off. Another credit event, whatever.

[@armchairincomechannel]

Thanks for your feedback. I like Adam's channel but Adam is focused on gold and skews his guest list to experts that predict crashes. If you want to balance that with a bullish analyst, I suggest also listening to Fundstrat's Tom Lee. He has been right on most of his predictions in recent years.

[@TroyD-vo1bz]

Appreciate the response. Adam certainly has guests who are bullish and I will check out Tom Lee as well. Totally open to that! I didn't really get the impression that Adam is trying to sway the content one way or the other. In fact, in so many of his interviews, he's very careful to say " I don't want to put words in your mouth, but here's what I think you are saying" He's an excellent communicator, and I didn't really find him to be biased. Could I be wrong? Of course! I certainly cannot speak to how he acquires his guests and if there is a bias there. You seem to respond with some conviction that Adam is focused on gold and skews his guest's list, but I'm curious where you're getting that information or if that is just opinion? (no offense meant here) If there is a bias there I would certainly like to know about it and that may sway my future decisions. I base a lot of my decisions on feedback from his guest. Most of them have 30 plus years of experience in the macroeconomics field. At this point I'm about 30% or so into income investing, and I would certainly like to increase that amount but I am proceeding slowly as I gain understanding. Today's video was very helpful in that regard. Always good to have hedges in your portfolio. And funny you mentioned Tom Lee as after checking today he's actually predicting a 20% pullback in the next 40 days.

[@WealthyChronicle]

Wow, this really opened my eyes to the difference between common and preferred stocks. Anyone else shocked at how they hold up when the market tanks? 🤔

[@armchairincomechannel]

Glad it was helpful! I find this stuff interesting but it barely gets mentioned on CNBC or other finance channels. Maybe tech stocks are more exciting.

[@ezcarlos1]

Hello ...Could you give me an idea on how you approach/analyze call risk in a preferred? I am struggling with the idea of buying a preferred like AGNCN at , say,$25.60 , without knowing when/if it will be called in a few days at $25 for a quick loss of more than 2%. Am I missing something? thanks and regards

[@armchairincomechannel]

The risk you described exits for all callable shares, which is why they don't trade much above $25 if they're callable. To avoid this you can focus on preferreds that aren't callable, those that trade below $25, or buy a fund of preferreds like PFFA. Having said all that...almost any stock can drop 2% in a day!

[@ezcarlos1]

@armchairincomechannel very true... Thanks!! And good luck going forward.

[@fredrickthegreat3895]

Sir, what is the expense ratio for EIC?

[@armchairincomechannel]

That's a difficult question to answer because its not listed on their website. In the video I made about EIC I reviewed their financial statements and by my calculations the expense ratio is 1.6%. That's quite high, and I'd like to see a simple break down of their expenses so that I could understand what goes into it.

[@jayman4795]

Great vid. Have you looked into GLDI, USOI, SLVO? They have a bit of a complicated history and may be a bit risky but interesting. Also, they’re ETNs - not ETFs - so they’re treated as debt. I think that means non-resident aliens (ie, not US persons) pay zero taxes on their distributions, whereas with ETFs you’d normally pay 30% (without tax treaty) or around 15% (with tax treaty).

[@armchairincomechannel]

Thanks! I've looked into them briefly. They're not for me for many reasons, including 1/I don't follow the gold or oil (or any commodity markets) so I don't know when to invest in those areas 2/ ETN's come with additional risks, including counterparty risk. I prefer ETF's. All non US tax residents can file a tax return to pay the actual tax due instead of the withholding (which usually works out to less than 15%), then receive a refund for the difference from the IRS.

[@Chris-dw6cu]

Based on your presentation these preferred stocks sound like very safe investments - but is there still some correlation between yield and risk with these? Looking at yield alone I'd be tempted to just put all my money into AGNCN since it has the highest payout. But does it have the highest payout because it also has the highest risk of bankruptcy? And does it tend to be more volatile than preferreds with a smaller yield?

[@armchairincomechannel]

Good question. There are a lot of factors that go into determining the yield. All other things being equal, higher yield means higher risk...but of course all other things are almost never equal :) It would be more accurate to say higher return equates to higher risk. A stock or fund might pay a higher yield because it is structured for income (eg REIT, BDC) and given that it pays out a minimum of 90% of its income to shareholders, the high yield is compensation for the lack of potential growth that comes with a regular stock. I wouldn't put all my money, or even half my money into any one stock or fund. That's concentration risk! If you want to learn about preferred stocks you could buy a portfolio of them individually. Or you could buy a fund like PFFA that holds about 200 of them. Regarding the risk of bankruptcy, yes, generally, lower distributions are paid by preferreds with higher credit ratings. Volatility is more complicated and varies with factors like whether the preferred is fixed or floating. Fixed usually comes with more volatility.

[@Shawnpla]

Hi - great video and good timing…i have been following your channel for 2 years and try to mimic your portfolio closely I’m trying to leg in and DCA while also making changes that you recommend….however i found that despite 3-4 tranches at different points in the year, my overall total is just barely over by half a percent including all the dividends…there are multiple investments which are down 5-10% Question - do you sell these 8-10% losers for tax loss harvesting as i will end up paying tax on the income generated despite paper losses which are not realized? Also with lot of market pundits expecting a crash/correction next year…what is your thought about sitting it in 2025, rather than having permanent losses Sorry for the long note but this is critical as I’m near retirement and any advice is highly appreciated!! Thank you

[@armchairincomechannel]

Thanks for watching the channel for so long! I hope you buy and sell based on your own strategy and only use my portfolio to look for new ideas :) There is no one portfolio that's perfect for everybody. Your results will depend a lot on when you bought (or sold) each stock. Tracking results is challenging with a constantly evolving portfolio. I started using Snowball to track my portfolio (and share it) in May 2024. Before then I just followed the numbers on 3 separate brokerage accounts. Since then I have made about 4 trades a week and reinvested a portion of my dividends every month. Not counting the reinvestment of dividends, the portfolio is up 6.7% since May, and the yield is currently 11.54%. Total return would require annualizing the 6.7% and adding the income. I don't have software that can do that for my portfolio. So no NAV erosion, but the market has been kind to us.Those numbers were calculated on Dec 27 of this year. I don't sell anything for tax reasons or because the price dropped. I made a video earlier this year that explains my top reasons for selling. In general, I sell because I don't think the investment will continue to deliver the level of consistent returns that I originally purchased it for. That might be because the market changed, the company changed, or the price went up so much that the yield is no longer competitive with other opportunities. As for 2025, I don't time the market so I'll remain 100% invested and reinvest every month. But that suits my personality because I accept the ups and downs of the market. That's not for everybody. I tried to time the market during the pandemic by going to cash, then I bought back in too late and that strategy cost me a small fortune. You have to do what works for your risk tolerance as it relates to your portfolio value, and your income stream. I'm ok with my portfolio value dropping considerably if my income remains relatively constant.

[@molten_ice]

I am an investor from the UK. Could you share your thoughts on withholding tax and reclaiming return of capital when investing in US ETFs? Some of the covered call ETFs tend to provide return of capital and non-US domiciled investors like us could reclaim back some withholding tax as a result. As one of the only non-US KZbinrs out there, could you make a video on sharing your insights? Thanks!

[@armchairincomechannel]

Great question. The IRS treats foreign investors favorably, specifically when it comes to capital gains and interest. I suggest checking 1/ If your country (of tax residence) has a tax treaty with the US 2/ What the dividend withholding rate is. Let's say it's 15%, for example. 3/ As a non-US investor, you can pay the withholding rate and do nothing more...I don't recommend that. 4/ Look for a tax accountant in your country that files US tax returns and ask them how much they charge. If you file a tax return with the IRS, you will be responsible to pay the ACTUAL TAX DUE, instead of the withholding amount. There's a good chance that the actual amount due will be less than 15%. If that's the case, the IRS will refund you the difference. I can't speak for the tax system in the UK, but generally, non-US tax residents don't pay tax on interest or capital gains.

[@molten_ice]

@@armchairincomechannel Yep UK is 15%. I didn't realise I had the option to file with the IRS directly. Might look into this, thanks. So that means dividends classed as return of capital, short term, and long term capital gains are all exempt and we should just get back all of it isn't it?

[@frankb7449]

What are the credit ratings of these preferred shares? I assume they are junk?

[@borska327]

JAAA invests in AAA-rated CLOs and it has a 5-star rating from Morningstar.

[@johnsonch7292]

@@borska327 JAAA is not preferred shares or any common stocks. It is a fund directly owns and purchases the actual real CLO. You are the shareholder or owner of those actual CLO.

[@lynnshaffer9313]

Just a question that popped into my head. I assume you're managing your money well. As time goes by in your retirement, do you find that a goal becomes to reduce volatility of your income stream from investments at the cost of a somewhat lower return (if this results in a similar absolute income amount), or do you enjoy maintaining a higher return and/or looking for higher return stocks?

[@armchairincomechannel]

That's a great question. I favor consistent income over maximizing returns. High return growth stocks don't pay the bills unless you sell the stock (or fund). That works quite well during a bull market. During a bear market, selling your losers isn't as easy. My goal isn't to beat the market, my goal is to pay for my life without having to be a good trader that can time the market.

[@fredrickthegreat3895]

Sir, what is the expense ratio on EICC?

[@armchairincomechannel]

Much like a stock or a bond, preferred stocks don't have an expense ratio.

[@fredrickthegreat3895]

@armchairincomechannel Loving the low volatility and high sharpe ratios on this funds. I am one of those investors who is constantly checking his phone for price changes.