Author Archive: Michael Foster

Covered-call funds give us something we demand at a time like this: outsized 8%+ payouts!

And the last few months have shown us something else: These funds work—especially when you use them in a specific kind of market (hint: conditions just like those we’re facing now).

Covered-Call Funds “Translate” Option Gains Into 8%+ Dividends

Even though the name sounds complicated, covered-call funds have a relatively straightforward setup behind them. They start by letting you hold a bundle of stocks, just like, say, an ETF would. In the case of the covered-call fund we’ll talk about today, the Nuveen S&P 500 Dynamic Overwrite Fund (SPXX), these are the companies in the S&P 500.… Read more

Usually in this space, we dig into 8%+ paying closed-end funds (CEFs) set to hand us strong returns and large income streams.

Today, we’re going to do something different and discuss a once-great fund that, sadly, is far past its glory days.

Why?

Because this fund highlights one of the dangers of high-yield investing. That would be the risk of getting too comfortable with a large payout—and ignoring the signs telling us it’s time to take our profits and walk away.

That’s not easy for those of us who invest for dividends! Especially when you have an income stream as big as the one this fund offers (a 12.7% annualized yield) rolling in.… Read more

The numbers are starting to support something I’ve long argued about AI: Yes, this technology is shifting the job picture—but it’s not throwing millions out of work.

Instead, the economy is shifting.

The new story? While tech-sector jobs are being cut (temporarily, I believe), growth in other areas—including those that are employing AI to drive growth (and hiring along with it)—is flourishing.

Investors, however, still haven’t caught on. And an ongoing stream of dour headlines—from a “hot” war in Iran to a trade war with Canada—has distracted them further.

That’s set up an opportunity in high-yielding, equity-focused closed-end funds (CEFs) like the Liberty All-Star Equity Fund (USA), payer of a blockbuster 11.4% dividend.… Read more

Look, we all know the old “truism” of investing: Want higher returns? You’d better be prepared to take on higher risk.

That’s not always true, however. In fact, sometimes markets do strange things, and a so-called “conservative” investment can turn around and deliver stunning returns. This is even more common in the world of closed-end funds (CEFs), where even stranger things can happen than in the “regular” stock world.

That’s in part because CEFs are a small market, so they tend to draw more individual investors, but fewer hedge funds and big banks. That can cause CEFs to overreact to some changes in the economy and markets and underreact to others, setting the stage for those strange moves I just mentioned.… Read more

We don’t often see the European Union as a major driver of stock returns.

I mean, American investors usually see the EU as stuffy and overregulated—when they think about it at all! But I urge you to reconsider, because this could be about to change.

When it does, funds with exposure to the continent—including an 8.5%-yielding closed-end fund (CEF) called the Allspring Global Dividend Opportunity Fund (EOD)—could catch a lift.

Let me be clear: This potential boost from Europe is only one reason to take a look at EOD. The main one is the fund’s discount to net asset value (NAV, or the value of its underlying portfolio).… Read more

Right now—today—we’re looking at a terrific buy window on 8%+ yielding closed-end funds (CEFs). Concerns over higher interest rates have put some of these often-ignored income plays on sale.

So today, we’re going to take a closer look at them. We’ll start by debunking a CEF myth called “return of capital,” or ROC, that has caused many investors to miss out on the sustainable high income streams these funds offer.

Let me be clear on what they’re missing out on. On average, the S&P 500 yields about 1% today and posts total returns of about 8.5% per year. That means a million bucks in the S&P 500 will earn about $85,000 in profit on an annualized basis, but just $10,000 of that would come in the form of dividends.… Read more

Let’s talk about this latest pop in Treasury yields and what it really means for those of us looking to save for (and generate reliable income in!) retirement.

Because the truth is, it means something completely different than what the mainstream media is trying to sell us. In fact, this situation sets up an opportunity for us to lock in high yields—I’m talking north of 6%—the longer it keeps up.

To be sure, the yield on long-term government debt is on the rise. At around 5.2% as of this writing, yields on 30-year Treasuries are now just below a high not seen in 19 years.… Read more

Today we’re going to look at a closed-end fund (CEF) that seemingly offers everything:

1. A 6.7%-yielding dividend that pays monthly.
2. A solid payout track record: This dividend has been delivered reliably for more than six years.
3. Terrific performance, to the tune of an 8.5% annualized return over the last decade.

And yet, this fund is a sell. If you own it, I recommend dumping it immediately.

I know that sounds a bit strange, so let me explain why it’s a risky investment, and how other funds like it are, as well.

Before I do, though, let me emphasize one thing: The managers of the GAMCO Global Gold, Natural Resources & Income Trust (GGN) are professional, qualified and good at what they do.… Read more

The media has been abuzz with fresh fears that the AI “bubble” is finally popping.

These worries, of course, have been around for almost as long as AI itself!

At the heart of the latest panic: semiconductor stocks, which have fallen hard, with the benchmark ETF for the sector, the VanEck Semiconductor ETF (SMH), plunging from an all-time high in late June to a level 11% lower today.

Yikes.

But here’s what we need to keep in mind: At CEF Insider, we’re mainly interested in collecting dividends in the long run. When these short-term panics arrive, we take advantage of them, and set ourselves up for extra upside as we do.… Read more

I’m sure you’ve heard about the worries around private credit. They really hit the wall when Blue Owl Capital, a major private lender, put redemption limits on one of its funds earlier this year.

As investors, we must take note when such things happen. But we also need to remember that breathless media coverage of such events creates opportunities. That’s especially true in situations like this, involving a corner of the financial world many people simply don’t understand.

These are just the kind of setups we love to exploit at my CEF Insider service. And this one is handing us an opportunity in regional banks—and in particular, a closed-end fund (CEF) holding such banks, and turning their profits into a growing 6.4% dividend.… Read more