Author Archive: Michael Foster

Investment Strategist

These Big Dividends (Up to 11%) Are Primed to Soar in “Bond Rally 2”

Michael Foster, Investment Strategist
Updated: July 18, 2024

At my CEF Insider service, we’ve been bullish on corporate bonds (especially corporate bond–focused closed-end funds yielding 8%+) for a long time now.

We remain so, because we’ve got a nice “goldilocks” setup for these funds right now:

  1. The US economy, while not booming at a rate that makes everyone happy, has steadily improved since the pandemic, prompting inflation to slow but remain elevated.
  2. The Federal Reserve, seeing this, is getting set to lower interest rates in late 2024, or possibly at some point next year.

These are both bullish signs for corporate bonds—and the closed-end funds that hold them. I’m sure I don’t have to tell you they were hit hard in 2022, resulting in an array of bargains.… Read more

Contrarians: These Are the Last Cheap Income Buys Out There (Yielding 8.4%+)

Michael Foster, Investment Strategist
Updated: July 15, 2024

This levitating stock market has brought back worries about a crash (and a recession). I know, I know. We’ve been hearing that doomsday forecast for what feels like forever—and nothing of the sort has come to pass.

But a recession will eventually show up. We just don’t know when. In the meantime, stocks could keep drifting higher.

We do not want to miss out on that. But we do want to pay special attention to assets beyond stocks now (and minimize the amount we have sitting in cash, by the way, which is getting eaten up by still-hot inflation).

This is where corporate bonds (many of which are oversold) enter the scene, particularly bond-focused closed-end funds (CEFs), many of which yield well over 8%.… Read more

Bill Ackman Is Going to Send These 8%+ Dividends Soaring

Michael Foster, Investment Strategist
Updated: July 11, 2024

Closed-end funds (CEFs)—our favorite 8%+ yielding investments—have a new (and popular!) fan. And he’s making a big move I see sending CEF prices higher.

Bill Ackman Discovers What We’ve Known for Years

I’m talking about Bill Ackman, one of the best-known activist investors out there. You’ve probably seen the head of Pershing Square Capital Management, a hedge fund with $18.3 billion in assets, in the media. He’s a regular commentator.

Ackman has scored some big wins in his career, such as his 2005 investment in The Wendy’s Co. (WEN). But he’s probably better known for his dramatic misses, like his losing bid to change the board of directors at Target Corp.Read more

These Unsung Buys Crush Hedge Funds, Yield 8%+

Michael Foster, Investment Strategist
Updated: July 8, 2024

Hedge funds have a big problem: They can’t beat the market anymore.

If you read the press, you’ll see a lot of concern over this. If hedge funds aren’t cutting staff, they’re struggling to find talent to try to boost their returns. Moreover, the industry mostly keeps shuffling people within its ranks, undercutting the stability needed to make outperformance last.

So it’s kind of strange that hedge funds are managing more money than ever. The industry was managing $1 trillion in the mid-2000s, a milestone at the time. But now hedge funds are managing more than $4 trillion globally. And they’re still growing.… Read more

How a Little-Known “Wage Gap” Will Send This 13.8% Dividend Soaring

Michael Foster, Investment Strategist
Updated: July 4, 2024

I spend a lot of time parsing the latest economic data before recommending funds in our monthly CEF Insider service. And while the business press almost always leads with fear when it comes to the economy, the real numbers tell us something else entirely.

Case in point: The three little-discussed economic stats we’re going to dissect today. Taken together, they tell us that now is a great time to buy stocks.

But to make the most of the shifts they foretell in the economy, 8%+ yielding closed-end funds (CEFs) are a far better pickup.

Here are the three factors I’m talking about (in order of importance):

  1. American incomes are still growing.
Read more

Inside the US Economy’s “Stealth” Boom (and an 11.4% Dividend to Play It)

Michael Foster, Investment Strategist
Updated: July 1, 2024

There are three very clear signs the stock-market bull will keep stampeding. Let’s dive into them, then talk about two discounted funds set to ride those gains (and pay us rich dividends up to 11.4% in the process).

Bullish Signal #1: The US Worker is Strong

There’s a lot of pessimism about the US economy out there, even though it’s doing well. We’ve discussed why this is before—it’s ultimately due to the media getting more pessimistic—but this chart proves the point.

Since the Federal Reserve started tracking workers’ average weekly earnings in 2006, they’ve risen at a steady rate of about 2.6% annualized from then to 2020.… Read more

Thank Absurd Media Negativity for This Cheap 6.9% Payout

Michael Foster, Investment Strategist
Updated: June 27, 2024

As a contrarian dividend investor, I’ve always looked to buy when media-driven worries run directly counter to the data.

And these days, the media is more negative than it’s ever been, despite the data showing the economy is performing well. Today we’re going to exploit that divide and look at an overly discounted, 6.9% dividend that’s nicely positioned to profit from it.

Media and Experts Distort Their Real Views All the Time 

What I’m really talking about here is the so-called “vibecession,” we discussed a few months ago—the feeling that we’re in a recession even though the data says the economy is performing well.… Read more

The Surprising “Signal” These 8% Dividends Give Before They Soar

Michael Foster, Investment Strategist
Updated: June 24, 2024

Closed-end funds (CEFs) are my No. 1 income plays for a reason that goes beyond their huge dividends: We can tap these off-the-radar (for now!) funds for big price gains, too.

We do this in my CEF Insider service using a time-tested CEF tactic: Buy CEFs trading at discounts to net asset value (NAV, or the value of their portfolios), then sell them at par or, better yet, a premium.

This isn’t rocket science: We’re following the oldest investor play there is: Buy low and sell high! To do it, we’re letting the discount to NAV, a critical CEF metric, be our guide.… Read more

Time to Profit From the 8% “Wallflowers” of the Dividend World

Michael Foster, Investment Strategist
Updated: June 20, 2024

I’ve dedicated my career to closed-end funds (CEFs) because in a way, these high-yield investments saved my life: Using these funds to get an 8% income stream from my portfolio gave me the confidence I needed to quit my academic job well over a decade ago.

I started writing about CEFs after that, mostly out of surprise and confusion: Why weren’t these reliable income plays—which yield 8.2% on average now—more popular?

Well, after over a decade of talking to economists, bankers, fund managers and other experts, I’ve come to realize they should be more popular, and that they probably would be after a big shock to markets made them irresistible.… Read more

The “Sleepy” 8%-Yielding Corner of the Market Is Finally Waking Up

Michael Foster, Investment Strategist
Updated: June 17, 2024

I’ve been covering closed-end funds (CEFs) for more than a decade. Through that time (and still today!) I’ve been shocked at how many people sleepwalk right past these incredible income plays, and the big dividends (and upside) they offer.

CEFs are publicly traded and highly regulated, like mutual funds or ETFs. The key difference? Big dividends! The 500 or so CEFs out there yield 8.4% on average, and they’ve historically have yielded 7%+.

They work by investing in the kinds of assets most of us own already—stocks, bonds and real estate mostly. They then hand out the resulting profits as dividends.… Read more