Author Archive: Michael Foster

It’s finally happening: Management fees on our favorite 8%+ paying assets—closed-end funds (CEFs)—are falling. And some are sending their already soaring dividends even higher, too.

Those are key reasons to invest in these high-yield plays now. We’ll get into all the details below. But before we do, it’s important that we take a second to put CEF fees in perspective. That’s because many (most?) investors have a totally incorrect idea about them. And it’s caused them to miss out on the income (and growth) CEFs offer.

Ignore the Wall Street Line: CEF Fees Are Sometimes Worth Paying

When I ask investors if they’ve ever considered CEFs, those who say no often mention high fees as a reason.… Read more

Every now and then here at Contrarian Outlook, we have a “big-dividend shootout”—we pit two big payers against each other and see which one wins out.

It’s a great way for us to accomplish two things as investors: 1) Grab the safest high dividends with the most upside, and 2) Sharpen our portfolio-building skills.

My beat is closed-end funds (CEFs), which are known for huge (and often monthly paid) dividends. These actively managed funds are a bit of a unique challenge to analyze because they each hold a lot of assets—often numbering in the hundreds.

Luckily there are a few indicators we can use to single out the best ones.… Read more

A couple weeks ago, on May 3, BlackRock, the world’s largest investment firm, did something that will send a shockwave through our favorite high-yield investments: closed-end funds (CEFs).

The result is likely to be higher prices for CEF investors in the future—and even steadier dividends, too. Most folks missed this change, but it’s only a matter of time until it makes itself known. We’re already seeing it kick in with some of these high-paying funds.

Before we go further, let’s be clear on what we’re talking about: The $400-billion universe of CEFs currently yields an eye-popping 8.2% on average.

How is that possible?… Read more

Every now and then in income investing, we get a sweet setup where a “boring” high yielder absolutely soars—practically overnight.

I recently saw such a scenario play out with a closed-end fund (CEF) called the BlackRock Municipal Income Fund (MUI). I bring it up now because what happened with MUI has a lot to teach us about how we can get stock-like gains from a so-called “boring” income play like this.

Despite its sleepy-sounding name, MUI is what I consider a “triple threat” investment because it can pay us in three different ways:

1. Its dividend, which yields a high 5.5% and has been remarkably stable, even throughout the low-rate 2010s.

One of the biggest retirement-investment mistakes you can make is to make things more complicated than they need to be.

Funny thing is, Wall Street actually makes it easy to fall into this trap! Case in point: A new “financial product” from a group of companies, including BlackRock, that combines target-date funds and annuities.

We’ll get into why this isn’t a strong retirement option for those still working in a second. Then we’ll stack it up against a “straight down the middle” 9.2%-paying closed-end fund (CEF) that gives you the dividends, liquidity and growth necessary to fund a more comfortable retirement—maybe a lot sooner than you think.… Read more

An unusual trend has hit Silicon Valley that’s running far below the radar: a big shift toward paying dividends.

We’re going to take full advantage by grabbing something unheard-of, even for die-hard tech investors: A 9.3% dividend that grows. 

That’s a real eye-opener for tech, to be sure. Because while more tech stocks are paying dividends these days—even long-time holdouts Meta Platforms (META) and Alphabet (GOOGL) now offer payouts—most of these are still tiny. (Meta and Alphabet both yield just 0.5%).

Of course, there are tech-dividend stalwarts that pay at least a bit more and offer long histories of payout growth, too, like Microsoft (MSFT) and Cisco Systems (CSCO), which yield 0.7% and 3.3%, respectively.… Read more

If you’ve been following the AI space lately (and honestly, who hasn’t?), you’ve probably seen stories about tech investors feeling a bit shortchanged on the profits they’re getting.

That’s actually good news for the rest of us—a sign the market is maturing and ripe to be tapped for income.

Specialists Often Miss the Bigger Picture

Experts make this mistake all the time. There are a few reasons for this, but probably the biggest is overreach: You can be a wizard at technology, you can even be a genius at investing in technology, but you can still be wrong if growth happens differently than you expect.… Read more

Right now—today—we’re looking at a terrific buy window on 8%+ yielding closed-end funds (CEFs). Interest rates are maxed out (and let’s be honest, they’re headed lower—even if “go time” on cuts has been pushed back a bit).

That will drive up the appeal of CEFs, thanks to their outsized income streams.

So now is a great time to take a look at these (too) often overlooked income generators. Today we’re going to do just that. 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.… Read more

Don’t believe anyone who tells you there’s such a thing as a safe investment. Truth is, every asset—from Treasuries to houses to dividend stocks—involves risk.

The “safest” investment, according to the Financial Industry Regulatory Authority (FINRA), is a short-term US Treasury bill. You lend the government $100, say, and you’ll get $105.17 back in a year. Not bad.

But there are some caveats:

1. Short-term Treasury rates fluctuate, and the Federal Reserve has said they’ll try to get them lower later this year.
2. In a truly apocalyptic disaster, you might find that the Federal Reserve doesn’t pay your money back. In fact, you might find that money itself is worthless.

I have to admit, every year it gets harder and harder to do my taxes.

The process isn’t any more difficult—or at least if it is, my accountant isn’t saying! No, my problem is the money I end up owing.

Having to write a check to Uncle Sam for more than I earned in my first three years of working is hard to do. Which is why I’m always looking for ways to cut my taxes.

And really, the best way for me (and most likely you, too) is through a “boring” sounding investment called a municipal bond. There are three reasons why:

1. Municipal bond, or “muni,” returns can amount to more than 9% per year for those in high tax brackets.