Author Archive: Michael Foster

One of the best things about high-yielding closed-end funds (CEFs) is that they can post big gains and be strong bargains at the same time.

That’s a tougher circle to square with stocks: It’s hard to argue, for example, that NVIDIA (NVDA) and Apple (AAPL) are “cheap” now, given the strong runs they’ve been on.

But a single CEF can (and regularly does) offer both growth and value. In fact, it’s something we love to see, because it shows a fund is already rising, thanks to the momentum of its underlying portfolio (referred to as its “net asset value,” or NAV, in CEF-speak).… Read more

The stock market is roaring, and according to the media, it’s all because of AI.

But is that really true?

Because if it is, there must be other corners of the market, beyond tech, that are being overlooked. And that’s where we contrarians want to go hunting for high, steady (and cheap!) dividends.

Let’s break this question down, starting from a 50,000-foot view, then zeroing in on an ignored 8.1%-yielding fund with strong upside as investors come to realize its true value.

Source: State Street Investment Management

This table is a great starting point—a kind of roadmap to where the cheapest stocks in the S&P 500 might be hiding out.… Read more

Let me take you back to April 2001 for a second. Because that year brought a key turning point for income investors.

I’m talking about the launch of the SPDR Dow Jones REIT ETF (RWR). The fund rolled down the skids with a simple mission: Give investors an easy way to buy a diversified basket of real estate investment trusts (a.k.a. REITs) in one low-cost index fund.

It was exciting because, back then, REITs had outperformed stocks when their high payouts were reinvested. And their dividend yields were much higher than those of the typical S&P 500 name, too.

Backed by reliable rents, as well as the constant need for space to store and sell things (for businesses), as well as places to live, work and have fun (for individuals), the sense was that demand for real estate would never end.… Read more

There’s a clear “disconnect” happening in the US economy right now. And most investors are on the wrong side of it.

Funny thing about it is, it’s pretty obvious. We hear about both sides of it in the news daily, but few people truly see it for what it is. And the 10.5% dividend we’re going to discuss today is the perfect play on this misconception.

The first part of our opportunity? Consumer sentiment, which I’m sure you’ve heard is in the tank:

Here’s the University of Michigan consumer-sentiment survey over the last 50 years. At the right side of this chart we see that the current level is the lowest it’s been in all of that time.… Read more

Closed-end funds (CEFs) yield around 8% today—and that’s on average. Plenty yield more—and deliver their payouts safely, predictably and often monthly, too.

Members of my CEF Insider service know this. As I write this, our portfolio yields a high 8.8% on average, even as many of our funds’ prices have risen with this year’s strong market. And 12 of our current 21 holdings pay us every month.

All that said, we also know the old adage that something that seems too good to be true usually is. That also applies to CEF yields, especially when we spot a vastly overinflated one (24.6%, say).… Read more

Stocks are up, and the media is finally coming around to what we’ve been saying at my CEF Insider service for months now.

Last week, The Economist wrote a breathless piece about how the US economy is firing on all cylinders—and fears that a recession will sideswipe stocks are just plain wrong.

We’re happy to see a leading publication like The Economist come around on this point, of course. Even better, we now we have the data to prove it:

Across the board, the S&P 500 saw a 27.7% earnings gain in the first quarter. That’s shocking when, historically, profits have risen in the 5% to 8% range.… Read more

If you ask the average investor what, say, an ETF is, you’ll likely get a good answer. A closed-end fund (CEF)? Likely a blank stare.

That’s because CEFs are a tiny corner of the market, with only about $300 billion in assets among them. ETFs? About $13.5 trillion. The scale is way out of whack here.

At CEF Insider, of course, we like it this way. It’s why “Insider” is in the service’s title.

Since CEFs are obscure, we can easily find overlooked ones trading at big discounts to net asset value (NAV, or the value of their underlying portfolios).… Read more

Investors are flipping back into buy mode, which has been a boon to the equity funds we hold at my CEF Insider service—especially on the tech side.

Our position in the BlackRock Technology and Private Equity Term Trust (BTX) is a good example. We bought this closed-end fund (CEF) in late February—the day before the Iran conflict started—and it’s already returned around 25% for us as of this writing.

BTX Pops On Our Latest Recommendation

This monthly payer has only issued one dividend in that time! When we bought, it yielded around 9.5%. That’s down to 7.7%, as current yields move down as prices rise.… Read more

There’s a big disconnect between the headlines and vanilla investors’ mood these days.

The headlines? Dark. Investors? Greedy.

Source: CNN

The CNN Fear & Greed Index has its flaws, but on the whole is a decent indicator of where investors’ heads are. As we can see here, despite the Iran conflict, they’re giddy.

At times like these, it pays for us contrarians to be cautious.

For us closed-end fund (CEF) investors, however, this isn’t a big concern. The funds in our CEF Insider portfolio (21 in all, with an average current yield of 7.9%) are run by pros we can count on to navigate overly exuberant times like this.… Read more

This has got to be the most “hidden” (maybe hated?) stock-market run I’ve ever seen.

The headlines are all doom and gloom (I think you’ll agree), but behind it all, the stock market is on a roll—returning 31% in just the last year. That’s more than triple the market’s long-term average yearly return of around 10%.

Where does that leave those of us who look to stocks for growth and income? Is there more runway ahead, or is it too late to buy in?

In my opinion, this 31% gain is setting the table for more, and we’ll get into exactly why in a moment.… Read more