Author Archive: Michael Foster

I’ve seen a lot more news stories trying to do something that seems a bit weird these days: stoke anger between generations.

I bring this up because it’s an example of why, when it comes to picking stocks (and 8%+ paying closed-end funds), we simply can’t trust the media anymore.

Why? Because many outlets are so focused on generating emotional responses (and the clicks that go with them) that they’ve gotten far away from what really matters: the real data behind what they’re saying.

With that in mind, we’re going to look at a data-driven indicator that tells us whether or not it’s a good time to buy.… Read more

It’s been a long time since we talked about pandemic bargains, but believe it or not, there’s still a big one out there.

I do think it’s finally on borrowed time, though, which is why it’s on our radar now.

I’m talking about publicly traded real estate investment trusts (REITs). What we’re looking at with REITs is a classic “buy the dip” play with a (very!) long buy window indeed. Here’s a snapshot:

REITs Trail Stocks Post-Pandemic …

Over the five years since the depths of the pandemic, the S&P 500 (shown by the popular index fund in purple above) has posted a 106.5% total return, as of this writing.… Read more

Selling on fear is a habit that’s so easy to fall into (especially now!). But giving in to it could cost you a lot: as much as $2,300 on every $10K invested.

And if you’re investing for income (as we are!), you face a double hit.

Not only do investors almost always get the timing wrong, but they cut off their income stream, too! When you’re holding our favorite income plays, closed-end funds (CEFs) yielding 8%+, it’s especially damaging.

I mention this now because I was reading a recent report from Morningstar that put the potential damage from this mistake into dollars and cents.… Read more

Today we’re going to run a simple “rinse and repeat” trade that—time and time again—gives us income investors what we all really want:

High—but sustainable—dividends, plus a nice capital gains “bonus.”

In other words, the full package of income and upside. In investing, this combo goes by the name total return, and it’s what we really need to focus on to build a portfolio that lets us retire with true peace of mind.

Most investors know this, but then quickly forget it when they run up against a stock with a massive yield, like the 21.1% (!) payout on Prospect Capital Corp.… Read more

If you’re retired (or planning your retirement—which, of course, we all are!), I have great news: You can probably take a lot more out of your nest egg every year than you think.

I’m talking about safely withdrawing 8% or more from your portfolio—without the prospect of living a lot longer than your money does!

We can thank an unlikely wealth generator for this turn of events: AI.

Before you ask, no, I’m not talking about putting a chatbot in charge of your finances! I’m talking about a low-key way the tech is helping retirees (and near-retirees) boost both their investment income and their net worth, leading to that huge 8%+ withdrawal rate we just talked about.… Read more

Treasury Secretary Scott Bessent is arguably the biggest stock-market cheerleader in American political history. And that fact is throwing a floor under stocks in a way few people realize.

It’s another reason to buy stocks now—or better still, stock-focused closed-end funds (CEFs). Because when things get rough, we can count on Scott to temper policies that might otherwise ruffle the markets.

This sounds like a minor thing, but it’s key in a market like this, which I see as still having room to run, even though, yes, valuations are getting stretched.

The Stock Market Indicator

To get at the moderating effect of Bessent’s presence, we need to start with President Trump, who has a long history of caring about the stock market, even though his career was in private real estate.… Read more

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.… Read more

I hate to see investors (particularly retirees) starving for dividends, especially with inflation stuck around 3% (and you and I both know that the real number is higher—just head down to your local grocery store!).

A big myth around dividends is that you have to invest a lot upfront to get anything meaningful in return. It’s easy to see why people feel that way, with the average S&P 500 stock paying a meager 1.1% as I write this.

This is where my favorite investments, closed-end funds (CEFs), come in. Using the three we’ll delve into below, you could get a little over $1,000 a month in income, thanks to their double-digit yields.… Read more

If I can give you one piece of advice now, it’s this: Don’t fear this talk of an AI bubble.

In fact, we should love it, because it’s set to hand us a shot at big dividends and gains—especially in closed-end funds (CEFs), which yield around 8% today and regularly hand us “dividend deals” that simply shouldn’t exist.

Our job: Buy, then ride along as CEF investors, who tend to be slowpokes compared to stock buyers, finally come around and bid our funds’ prices up. And we collect those rich dividends—often paid monthly—while we wait.

One CEF is giving us just such a nonsensical discount today: a 7.7%-payer called the Virtus Artificial Intelligence & Technology Opportunities Fund (AIO).… Read more

Business development companies (BDCs) have gained popularity in recent years, but they still don’t get as much attention as they should. Which is too bad, because they pay life-changing (no exaggeration here) dividends.

The two we’ll look at below yield more than 12.9%. In other words, drop $10,000 in and you’re getting $1,290+ back in dividends every year.

That makes BDCs useful tools for retirees. They’re also a “best friend” to what I’ll call “middle market” companies—those that are too big to borrow from a local bank but too small to interest big, institutional players like, say, a Goldman Sachs (GS).… Read more