Author Archive: Michael Foster

The market pullback we’ve seen in the last couple of weeks really hasn’t come as a surprise to me. The economy is sending what you could—at best—call mixed signals right now. And stocks, as they do in uncertain times, are reacting.

I expect more volatility ahead, so today we’re going to talk about ways to protect ourselves while maintaining the 8%+ dividend streams we’re drawing from our favorite closed-end funds (CEFs). (Read: We’re not going to cash here.)

Instead we’re going to focus on a strategy that’s been around as long as investing itself—diversification—by putting a bit more weight on assets beyond stocks.… Read more

For years, it’s been a struggle to try to convince many US investors to spread some of their money abroad.

It’s only natural: We simply tend to favor the familiar—our home country—over others. Investors the world over have this natural bias.

But that’s been slowly changing in recent months. Which is great news, because diversifying internationally is a particularly smart move in times like these.

Moreover, when you diversify—especially through 8%+ yielding income investments like closed-end funds (CEFs)—you can easily rebalance your holdings in line with changes in the market, moving more into US stocks when they’re low, say, and international assets are high.… Read more

There are two things I need to bring to your attention right now, especially if you’re an income investor. One is my outlook for the market, as volatility really hits home.

The other is a 15.6%-yielding(!) fund that just changed its name and ticker—and really grabbed contrarians’ attention in the process.

Let’s start with what’s really going on with this wild market.

The NASDAQ is now down more than 10% from its peak price, and stocks on the whole are down for the year. I don’t expect this to last very long. My take: 2025 is likely to be a year of volatility rather than a year of decline.… Read more

I recently got some reader feedback that made me realize something: When it comes to our favorite income investments—8%+ yielding closed-end funds (CEFs)—there are still a lot of misconceptions out there.

It’s key that we put those right, because they’re causing some investors to miss out on CEFs, and the big (and often monthly) dividends they provide. And I know I don’t have to tell you that in turbulent times like these, high payouts like those are a lifesaver.

This reader wrote in response to a recent piece I wrote about how CEFs can be better than ETFs, pointing out two things:

1. The three CEFs I mentioned in the piece have higher expense ratios than passive funds.

When it comes to the economy, we’re in a bit of a weird spot: The data tells us that, despite inflation fears, interest rates are likely to fall in the year ahead.

Falling rates point in one clear direction for us contrarian income-seekers: corporate bonds. Our preferred way to tap into them? Discounted closed-end funds (CEFs) with big dividend yields.

If investors know any corporate-bond CEFs at all, they probably know the PIMCO Dynamic Income Fund (PDI). It’s the biggest of the bunch, with a $5.1-billion market cap and a monster 13.3% yield.

With that in mind, PDI is a good gauge of investor interest in corporate-bond CEFs, and that interest is booming, as we’ll see in a moment.… Read more

There’s no doubt it’s been a rough couple weeks for stocks: Both the S&P 500 and the tech-focused NASDAQ  have wiped out most of this year’s gains, as of this writing.

Stocks Reverse Across the Board

The bigger decline among the NASDAQ, compared to the S&P 500, is notable here because the NASDAQ involves both higher risk and higher reward: With a heavier focus on tech stocks, it’s more volatile than the more diversified S&P 500.

But it also reflects where many of the higher profit margins have been among US firms. Hence, it has outrun the S&P 500 for a long time.… Read more

Here’s where I see stocks now: Yes, we’ve got some legitimate concerns as some economic warning signs appear—and run up against the tech-driven optimism that’s powered stocks to lofty heights.

The result? Volatility.

So today we’re going to look at a couple quick moves we can make to both protect ourselves and tap into the bargain income opportunities—including a 10.6%-paying closed-end fund (CEF)—that times like this always turn up.

For that, we’re really talking about two things.

First up, we’re going to add income plays beyond stocks. Specifically, we’re going to look at corporate bond–focused CEFs, many of which are paying double-digit yields and are poised to tack on serious price gains as the economy slows.… Read more

Today we’re going to use a simple strategy to (legally!) beat the tax man. The key is a (too) often-ignored group of funds whose dividends are beyond the reach of the IRS.

The low-risk assets behind this income stream really should be part of any income investor’s portfolio. And the three funds we’ll discuss below, which yield up to 7.3%, are a great place to start. Thanks to their tax-free status, their “real” yields will likely be considerably more for us.

Enter “Boring But Beautiful” Municipal-Bond Funds

Here’s the truth on taxes: If you’re an American and you receive any kind of income, you’re going to get taxed.… Read more

We contrarians love a beaten-up corner of the market—especially these days, when cheap stocks (and funds) are so thin on the ground.

Right now, real estate investment trusts (REITs) are that corner of the market: unloved, cheap and boasting high, stable dividends. And they have even more appeal with interest rates stabilizing and likely to move lower over time.

We’re not taking advantage of this opportunity by purchasing our REITs individually or through an ETF, though. Instead, we’re looking to REIT-holding closed-end funds (CEFs). These income machines, kicking out 8%+ dividends, are no less than my top contrarian income plays for 2025.… Read more

If you’re like most income investors, you’re on the hunt for stocks and funds that can stand up to a storm these days.

So that’s what I’m going to give you below—in the form of three “all-weather” closed-end funds (CEFs) kicking out an outsized 6.8% average yield.

They’ve stood firm through every headwind imaginable—wars, pandemics, inflation, you name it—and have done nothing but profit over the long haul. Through all that, this trio has kicked out annualized total returns (with dividends reinvested) of 15%+ each.

“Shock-Proofing” Your Portfolio, Crushing ETFs

These funds’ stellar returns come from both the sector they focus on—tech—and smart management that’s kept all three going strong.… Read more