We don’t often see the European Union as a major driver of stock returns.
I mean, American investors usually see the EU as stuffy and overregulated—when they think about it at all! But I urge you to reconsider, because this could be about to change.
When it does, funds with exposure to the continent—including an 8.5%-yielding closed-end fund (CEF) called the Allspring Global Dividend Opportunity Fund (EOD)—could catch a lift.
Let me be clear: This potential boost from Europe is only one reason to take a look at EOD. The main one is the fund’s discount to net asset value (NAV, or the value of its underlying portfolio). It’s in the “sweet spot”: cheap, at 8.3%, but moving toward par.
EOD’s Discount Trend Shifts in Our Favor
I expect that to continue for two reasons. The first: EOD’s US investments, which account for about two-thirds of its portfolio, stand to gain from ongoing growth here, capped with a productivity boost from AI. Lower interest rates in the longer run would add an extra kick.
That’s the foundation of our play.
Then Europe comes in with a setup to boost the roughly 13% of EOD’s portfolio held on the continent and in the UK.
What’s Happening Across the Pond
Let me start with something most American investors don’t realize about their European cousins: They’re just not as into stocks as we are.
The data, based on recent figures from the European Central Bank, tells the story: 32% of workers’ wealth is kept in cash, versus 11% in the US. And although 31% of US wealth is in stocks, just 5% of EU wealth is.
The result is a lot of cash on the sidelines, and for a bloc eager to trigger new investments, it’s low-hanging fruit. About $11-trillion euros (or around $12.5 trillion) of low-hanging fruit, to be exact! To unleash that cash, the EU is considering special tax treatment for investors. New kinds of low-minimum accounts are being rolled out across the continent, too.
The question then becomes: How can we grab upside (and income) as more of this cash rolls into stocks?
Let me be clear that our route does not run through CEFs directly: Due to other regulations, American CEFs are difficult for Europeans to buy. So we can’t expect a wave of euros to flood into our favorite income plays.
There are limitations, too. One is the well-known phenomenon of home-country bias, or the tendency for people to buy stocks in the nation in which they live. Plus, there are legal and regulatory restrictions, since European lawmakers are aiming to encourage European stock investment.
That steers us back to EOD. With its European exposure (backstopped by a strong base in the US), that shrinking 8.3% discount and an 8.5% dividend yield, it’s a “one-stop shop” as more investment in America and Europe lifts stocks in the US and the EU.
Beyond that, we have a history of strong performance, with EOD posting an 11.8% annualized total return, on a market-price basis, over the last decade, beating the benchmark Vanguard European Stock Index Fund ETF (VGK).
And on a NAV basis, EOD has been crushing VGK, too (see the purple line in the five-year chart below):
EOD’s Portfolio Outruns European Stocks
That’s not surprising for a fund whose portfolio is fronted by outperformers like NVIDIA (NVDA), Apple (AAPL), Alphabet (GOOGL) and Microsoft (MSFT). The fund also boosts its income through its holdings of high-yield corporate bonds (around 20% of the portfolio). In addition, it sells covered-call options on its holdings—a strategy that generates extra income for the fund and performs best in volatile markets.
That’s another key, because I do expect more volatility as we enter the last few months of 2026, with midterms in the US, ongoing uncertainty in the Middle East and rising yields on long-term government bonds, both in the US and globally.
We also love the fact that the fund has been returning recent strong gains in its NAV to investors in the form of a rising dividend. As you can see below, the payout has been climbing since 2023, right around the time the fund’s NAV started to take off:
Source: Income Calendar
I expect more gains, and potentially further dividend hikes, as EOD’s portfolio benefits from continued strength in the US and more stock investment from Europe. That’s just the kind of diversified setup we crave in an uncertain market like today’s.
The fact that we can get in for 92 cents on the dollar, thanks to EOD’s discount, is a bonus.
Your Best Play? Mix “Unloved” Europe With AI Gains for Big Upside, 10% Payouts
As contrarians, we’re always on the lookout for situations like the one brewing in Europe right now.
Europe has always been overlooked in the US, where it’s (too) often seen as a bastion of regulation and slow growth.
That’s changing. And CEFs like EOD give us a nice way to grab a piece of the action, with a portfolio boasting a solid position in Europe and a strong base of US stocks.
And you and I are going to go one better—we’re mixing the coming European stock boom with another underappreciated boom, in the form of AI.
I’m not talking about chasing the NVIDIAs and Microsofts of the world here. The biggest gains in those stocks are in the rearview.
I’m talking about getting ahead of the tech as it spreads across the economy, into underappreciated areas like healthcare and insurance—two industries AI is set to supercharge.
You can get our full strategy in my exclusive investor bulletin, the “4 Pivot Point” 10% Dividend Portfolio.”
It lays out 4 corners of the AI boom that aren’t (yet!) getting the attention they deserve. It also introduces you to 4 bargain-priced funds that tap straight into these areas, and pay you a 10% average dividend, to boot.
Don’t miss your chance to get in now, while these 10% payers are still available at a bargain. Click here to read this free investor bulletin and get a Special Report revealing these 4 funds’ names and tickers.