Author Archive: Michael Foster

One mistake I’ve seen investors make time and time again is leaning too heavily on the latest “investment product” their bank is pitching them.

The problem arises because at the heart of the banking system lies a key conflict of interest: banks make money off fees and interest charged on investments, loans, credit cards and other products, so they’re motivated to get you to use those tools more.

But that usually lies at cross-purposes with our goal as income—and more specifically closed-end fund (CEF)—investors: to retire early on a high income stream (and ideally on our dividends alone), with no need for banks’ expensive loans and debts.… Read more

We’re in a weird time where interest rates are at (or at least near) a peak—but most people haven’t realized it yet. When they finally come around, one group of closed-end funds (CEFs) is likely to soar (and pay us double-digit dividends, too).

I’m talking about bond funds, and the “double-digit dividends” part is already well underway, with yields on some corporate-bond CEFs held by my CEF Insider service breaking over 12%. (An added bonus: most bond CEFs pay dividends monthly, too.)

By the way, it’s not just me talking here: it’s the world’s biggest asset manager, a firm that, due to its sheer size and deep research resources, has access to next-level insight no one else can compete with.… Read more

I recently read a couple news pieces that brought what’s happening in the US economy these days into sharp focus. It’s a phenomenon I like to call “Cappuccino Effect.”

I’ll admit, it sounds too cute by half. But stick with me as we run through it, because I think it highlights a timely buying opportunity in 7%+ yielding equity closed-end funds (CEFs) whose portfolios are tilted toward consumer names.

Let’s start with inflation, which we all know ran hot last year. Some people didn’t expect this, while others thought it would last for a long time. Turns out both were wrong.… Read more

People often don’t believe me when I tell them there are great funds out there paying sustainable 8%+ dividends—it just sounds too good to be true.

But there are literally hundreds out there that pay that much and way more, including the 9.6%-yielding Liberty All-Star Equity Fund (USA). Beyond having the best ticker out there, this one just hiked its payout even higher (by 6.7%, to be precise). The move came as no surprise to anyone already in the know about this smartly run closed-end fund (CEF). 

USA (in purple below) has a terrific track record, too, soundly beating the S&P 500, shown below by the performance of the benchmark Vanguard S&P 500 ETF (VOO), in orange, over the last decade.… Read more

One of the most difficult things for me in 2022 was that, with all the doom and gloom in the air, I heard about a lot of people giving up on the dream of financial independence.

The worst part was that they were doing so at exactly the wrong time—right when the market decline had driven the yields on our favorite closed-end funds (CEFs) way up. Even now, after the S&P 500 has posted roughly 15% gains in 2023, as of this writing, plenty of CEFs yield 10%+, including nine in the portfolio of our CEF Insider service.

Worse, these folks were doing it because they’d bought into the media’s false narrative that a recession was looming, a trap I regularly warned about falling into here on Contrarian Outlook and in the pages of CEF Insider.… Read more

One of the most accurate indicators out there is telling us a recession is ahead. And—odd as it sounds—that warning is bringing us a chance to buy a 6.9%-paying fund with two key advantages:

1. This fund—a closed-end fund (CEF), to be precise, generates extra income when the bull takes a breather, making its 6.9% payout even safer, and …
2. It’s cheap, in relative terms, and will likely be in higher demand as a recession nears.

That fund, the Nuveen NASDAQ 100 Dynamic Overwrite Fund (QQQX) is at the center of our strategy today because of something that sounds obscure but should be on every investor’s radar: the yield spread between 3-month and 10-year Treasury notes is negative—meaning the yield on the 3-month is higher than that of the 10-year.… Read more

Here’s some great news as we head into the summer market doldrums: we’ve got a terrific setup to buy, with stocks rallying, economic data strong—and the S&P 500 (and many high-yielding closed end funds) still cheap.

These bargains exist because of the media’s constant bleating about a recession. But that, of course, has been completely wrong—and I expect it will continue to be.

The key takeaway is that our buying opportunity in CEFs is as strong as it’s been since this rally started in January—which is why five of the six CEFs in the equity section of our CEF Insider portfolio, which boasts an 8.8% average yield as I write this, are buys.… Read more

TV personality Suze Orman has bad news for anyone hoping to escape the rat race: they’ll probably have to wait until they’re over 70.

In a recent interview, the host of the Suze Orman Show splashed cold water on the idea that anyone can enjoy their golden years without clocking in at the office. “Stop this ‘Oh, I’m going to retire at 60. I’m going to start claiming Social Security at 62!’” she proclaimed to viewers.

The reason Orman is adamant most people don’t have enough money to retire, and won’t until they’ve hit 70? She says the 4% rule—a cornerstone of retirement planning for decades—is “dangerous,” and no one should “be using the 4% rule on any level.”… Read more

There’s a “secret” floating around no economist or pundit wants to admit: all the usual measures of predicting the economy’s direction are broken.

That’s ushered in a shift from the old ways of forecasting (which were never that great, to be honest) to the new—and set up a “one-time-only” sale on the best 8%+ yielding closed-end funds (CEFs) out there.

Buying CEFs—which are renowned for their huge (and often monthly) dividend payouts during this “window” is smart for anyone looking to set themselves up for 8%+ payouts for decades to come. We’ll look at one specific fund yielding 8.2% and trading for a bargain 14% below its “true” value in a moment.… Read more

Stop me if you’ve heard this one: “If you buy a high-yielding investment, your big yield won’t last because they’ll cut dividends.”

I hear it a lot, so let’s talk about two funds that haven’t cut distributions in the last decade. In fact, these closed-end funds (CEFs), yielding 9% and 10%, respectively, have done the opposite, growing payouts and dropping special dividends, too!

High-Yield CEF No. 1: A “One-Click” Way to Get a Growing 9% Payout From Tech

One of my favorite CEFs comes from the biggest fund manager on earth: BlackRock, with more than $10 trillion of assets under management.… Read more