Are we in a stock market bubble or not? Let’s tackle that question head-on, because it’s all we seem to be hearing about these days.
I’ll put my cards on the table: We’re not in a bubble. I’m going to show you why I’m still bullish on stocks at these levels. Then we’re going to play overwrought bubble fears with a “cornerstone” fund that’s beaten stocks over just about every timeline but is still cheap (and yields a rich 8%, too).
When it comes to stocks, the truth is, there’s a good reason why they keep rising: We’re in a booming economy.
Of course, you might not feel that way—many communities across America are suffering. Income inequality, crime, corruption—it’s a mess out there. Those are all serious problems, to be sure. But just as the stock market is not the economy, the stock market is not society, either, and those problems can co-exist with a rising market.
Where Earnings Go, Stocks Follow
Stocks are rising because their moves are tied to one thing: earnings. And earnings are soaring.
Bloomberg recently reported on something we’ve been talking about for a while here at Contrarian Outlook and in my CEF Insider service: Earnings are growing as companies improve their profits through efficiency gains, some of which are driven by AI.
In fact, the earnings beats we’re seeing come from across the economy, from companies as diverse as General Motors (GM), Coca-Cola (KO), Morgan Stanley (MS) and, of course, tech names like Broadcom (AVGO) and Lam Research (LRCX).
While tech continues to be the top-performing sector, there’s good reason to expect that more and more gains will come from outside of tech, as new innovations spread from that sector into other parts of the economy.
This doesn’t mean we should simply avoid tech and buy the rest of the market. After all, tech’s earnings gains are the strongest out there and will likely remain so, although financials are a close second.
At a time like this, we want broad-based market exposure. But of course, as my CEF Insider members know, we do not want an index fund. Their paltry 1% yields are just plain unacceptable to us income investors.
The 8% Dividend Opportunity
Instead, we’re going with a closed-end fund (CEF) that invests in a broad range of S&P 500 stocks, but with a key difference: This one pays a rich 8% yield.
That would be the Adams Diversified Equity Fund (ADX), which holds tech darlings like Broadcom, as well as top performers from other sectors, like JPMorgan Chase & Co. (JPM). Thanks to its well-crafted portfolio, ADX hasn’t just matched the stock market’s returns over the last decade—it’s beaten it.
ADX Ahead of the Pack
This is why, at CEF Insider, we’ve been holding ADX for almost the entire time shown on this chart (and we would’ve held it for the entire time if CEF Insider had launched in 2015, rather than in 2017). This outperformance is great—but so is the dividend.
Big Payoffs—Now More Stable
ADX has yielded around 9.5% over the last decade, thanks to the huge special payouts management issued at year-end. But in 2024, the fund changed its distribution plans, going with a more evenly spread payout tied to the fund’s net asset value (NAV, or the value of its underlying portfolio). Now, ADX’s regular distributions are more consistent and reliable.
The fund pays about 8% now, largely because the stock price is up over 13% in 2025 (as prices rise, yields fall). But its total return including dividends is 21.7% for the year, as of this writing, again far ahead of the S&P 500, at 16.6%.
In other words, this fund has outperformed over the short and the long term. Yet it still trades at a discount to NAV.
ADX’s Wide—But Narrowing—Discount
ADX’s discount is now 8.3%, but it was over 10% at the start of the year (and was around 12% most of the time before that). With the fund’s high yield, market outperformance and smartly built portfolio, this discount is likely to disappear, especially as more money comes into stocks as bubble fears fade.
If you buy ADX today, you can still lock in this discount, boosting your upside potential while also securing that healthy yield.
4 Cheap 8% Dividends to Buy as Bubble Fears Spread, AI Grows
As we just discussed, all of this bubble talk is a great setup for us to come at this market from the opposite direction as most investors:
Instead of letting bubble fears drive us away from stocks, we’re buying. Specifically, we’re looking beyond Big Tech, at other sectors set to reap big profits as AI revolutionizes their businesses.
These are the companies that are quietly adopting AI, but its value to their businesses is not priced in yet.
We’re going to buy those stocks through—you guessed it—CEFs. I’ve got 4 for you that hold not only top AI developers but companies—from manufacturers to financial stocks—set to gain from AI’s continued expansion into the wider economy.
These will be the real winners from this tech, and mainstream investors, focused as they are on the so-called “Magnificent 7” tech names, don’t realize it yet.
That’s our opportunity.
The 4 picks I have for you yield a rich 8.2% on average, and they’re overlooked bargains, trading at completely undeserved discounts now.