Author Archive: Michael Foster

There are plenty of reasons to buy closed-end funds (CEFs), but the one that most investors love most is pretty obvious.

The income!

The average CEF yields 8.6% as I write this. And while most investors have been conditioned to believe that this level of payout is unsustainable, this is not the case with CEFs. Many of these funds sport yields of 8% or more and haven’t cut payouts in years, even decades.

In fact, several have grown their dividends in that time.

The reason why is simple: The stock market gains around 10.6% per year on average. So a CEF that invests in stocks and pays 10.6% per year can maintain payouts, theoretically, since the fund is just handing that profit to shareholders as a dividend.… Read more

I’m a contrarian at heart—but sometimes even contrarians have to go along with the mainstream opinion.

This (as much as it pains me!) is one of those times. You see, like most of the pundits out there, I expect another strong year for stocks in 2026. I see a roughly 12% gain for the S&P 500 this year, to be exact.

That bothers me. A lot.

I know that four strong years in a row is rare, indeed. But that’s what the data is telling me, and I’m not going to argue with it.

Still Plenty of Cheap CEF Dividends Out There—Even in This “Pricey” Market

Now this doesn’t mean there’s a lack of bargains waiting for us in our favorite income plays: 8%+ closed-end funds (CEFs).… Read more

While tech is all over the news these days, there’s another corner of the market throwing investors cheap, and surging, dividends. These stocks quietly soared in 2025, but they’re still cheap enough for us to get in on now.

And we have plenty of ways to do so at a bargain.

Chief among them? A growing 7.2% dividend that’s suddenly on sale.

Let’s set the table on that strong fund with the 50,000-foot view: I’m talking about the financial sector, which returned 15% in 2025, going by the performance of the Financial Select Sector SPDR Fund (XLF).

That makes it the fourth-best performer of all sectors, behind tech, industrials and communication-services stocks—the latter of which actually includes tech names like Meta Platforms (META) and Alphabet (GOOGL).… Read more

Is 2026 going to be the year the AI “bubble” finally bursts?

Maybe my use of quotes there tipped you off to my true opinion: Worries about an AI bubble are vastly overdone.

And today we’re going to grab a 10.6%-paying closed-end fund (CEF) that wins either way: If I’m wrong and there is an AI bubble (that pops), cash will flow into it. If not, that’s fine: We’ll happily collect its growing 10.6% payout.

From Silicon Valley to Wall Street

Of course, the AI CEOs agree with me that there is no AI bubble: Sam Altman, Elon Musk and the heads of Microsoft (MSFT), Meta Platforms (META), Alphabet (GOOGL) and Oracle (ORCL) are all bullish and willing to spend trillions on the tech.… Read more

Let me start the new year by laying out a proven investment fact:

If you want to find the coming year’s biggest losers, start by looking at the previous year’s biggest winners.

So let’s do that.

On the closed-end fund (CEF) side of things, last year’s top performer was a fund called ASA Gold & Precious Metals Limited (ASA), with a near-200% return.

ASA Romped in 2025 

But don’t let that return, or the fund’s “cheap” 9.6% discount to net asset value (NAV)—more on that in a moment—pull you in. Because I see ASA flipping from 2025’s best CEF to 2026’s worst.… Read more

The run that AI poster child NVIDIA (NVDA) has been on these last few years is truly incredible. That’s not news, of course. But what matters now is whether investors are overpaying for that growth—in both NVIDIA and AI as a whole.

NVIDIA’s Monstrous Run

Once a chipmaker known for appealing mainly to gamers, NVIDIA started to climb in 2023, thanks to a new technology only a few people really understood at the time: generative AI.

Then, as AI spread in 2024, hopes—and NVIDIA’s stock—soared. That was followed by more fears of a bubble in AI. As with NVIDIA’s share price, a chart is the best way to do these worries justice:

The Bubble in Worries About an AI Bubble 

There’s so much discussion of an AI bubble now that we seem to be in a bubble of talking about bubbles!… Read more

When it comes to high-yielding closed-end funds (CEFs), there’s one thing we always need to keep in mind:

Buying “new” CEFs can lock you into a big discount that never disappears.

That’s because, as we’ll see below, in the small world of CEFs, the market’s view of a new fund’s assets is often much less than what management thinks these assets are worth.

When that disconnect happens, big discounts are inevitable. But unlike, say, an established CEF that finds itself temporarily out of favor, the discounts on these new funds are far from being buying opportunities.

That’s because they can take a long time to close—if they ever do.… Read more

There’s a simple blunder out there that pretty well every income investor makes at one time or another.

It’s costly, both in terms of lost income and missed gains. And it starts in perhaps the most innocent place of all: the free stock screeners you likely use every day—Google Finance and Yahoo Finance chief among them.

This slip-up affects all high-yielding stocks. In fact, the higher the yield, the more it can steer you wrong! So for those of us who invest in closed-end funds (CEFs), what we’re going to discuss today can cause a real mess.

The good news?… Read more

Millions of investors are making a critical mistake that could leave their finances vulnerable—and at the worst possible time, too.

That error? Clinging to so-called “rules of thumb” that sound useful, but are so broad as to be almost irrelevant—even dangerous, depending on your personal circumstances.

Consider the so-called “rule of 25,” which is as simple as it is deceptive. It simply states that, before we retire, we should have saved up 25 times the yearly amount we plan to spend in retirement.

That’s a lot! The chart below matches up how much a retiree plans to spend (setting aside inflation to make things a bit simpler) to see how much they’d need to save, going by this “rule.”… Read more

If you’re reading this, I probably don’t have to tell you that the stock market beats most (all?) other ways of building wealth.

It’s not even close!

Over time, the S&P 500 has generated around a 10% annualized return. But of course, that line does not go straight up and to the right. There have been long periods when stocks have moved sideways, and occasional years (I’m looking at you, 2022), when they’ve taken a header.

At those times, in particular, we’re all keenly aware of the S&P 500’s lame dividend yield (around 1% as I write this). It means that those who hold, say, an index fund and need cash face the soul-crushing prospect of selling at a low (or maybe even a loss).… Read more