Author Archive: Michael Foster

Investment Strategist

A 7.9% Dividend With No Taxes? This Ticker Does That (and More)

Michael Foster, Investment Strategist
Updated: December 18, 2023

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 tickers we’ll discuss below, which yield up to 7.9%, 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

Why a “Santa Rally” Could Put Our Favorite Dividends on Sale in ’24

Michael Foster, Investment Strategist
Updated: December 14, 2023

It’s mid-December, and everyone wants to know if stocks—and by extension high-yield closed-end funds (CEFs)—are poised to roar into ’24 in a so-called “Santa Claus rally.”

I’ll venture a prediction, but before I do, I should tell you that I come at the whole idea of a Santa Claus rally from a bit of a different angle than most folks in the business media or on Wall Street.

I actually dislike Christmas cheer in the markets. Not because I’m a Grinch. Rather, it’s because I think Santa rallies are not a good sign for stocks going forward.

Take 2021, a year in which market sentiment whipsawed.… Read more

Think You Don’t Have Enough to Retire? These 8%+ Dividends Change the Math

Michael Foster, Investment Strategist
Updated: December 8, 2023

Today we’re going to build ourselves an outsized income stream with just three funds. Buy all of them and you’ll end up with an average yield of 8%+, with payouts rolling your way every month.

Investing doesn’t get much simpler than that!

You’ll also get strong diversification: The three funds we’re about to uncover hold stocks, bonds and real estate. Combined, give you exposure to thousands of assets across the country.

Maximizing Your Savings Potential

Before we go further, let’s put an 8% payout in perspective: If you have $1 million saved, it translates to $80,000 annually, or over $6,600 per month—a substantial amount that could either supplement or even replace your current income.… Read more

Santa Claus Rally Ahead? You Bet. Here’s How to Ride It With 11%+ Dividends

Michael Foster, Investment Strategist
Updated: December 7, 2023

It’s that time of the year again. I’m not talking about shopping for the kids, I’m talking about 2024 predictions—especially for our favorite dividend plays: big-yielding closed-end funds (CEFs).

It’s a particularly good time to talk about CEFs because the 2022 selloff has left us some pretty sweet deals that are still around … even though 2022 ended more than 11 months ago! Chief among these “held-over” bargains is the 11.7%-paying CEF we’ll get to in a sec.

First, when it comes to predictions, we should be clear that these days, the market mood tends to shift around the time the calendar flips.… Read more

This Lame Stock Advice Could Cost You 8% Dividends (and Millions in Gains)

Michael Foster, Investment Strategist
Updated: December 4, 2023

When I see people touting the 60/40 portfolio, I kind of feel like Haley Joel Osment’s character in the Sixth Sense. But instead of seeing dead people, I see dead ideas.

You likely know what I’m talking about: a portfolio that seeks to automatically balance risk by holding 60% in stocks and 40% in bonds.

It sounds sensible enough, but history shows that people who invest by this rule have been leaving a lot of money on the table for a long time:

60/40 Portfolio Pays Too High a Price for Low Volatility

One quick glance at US stocks, seen here in purple through the Vanguard Total Stock Market ETF (VTI), and bonds, in orange through the Vanguard Total Bond Market ETF (BND), shows a problem.… Read more

This Unfounded Worry Could Keep You From 20%+ Gains in 2024

Michael Foster, Investment Strategist
Updated: November 30, 2023

With the S&P 500 up double-digits this year, the media is at it again—cranking up worries that we’re headed for another crash.

“Stock-Market Crash: Expert Shares Huge ‘Red Flag’ Signaling Recession,” says Business Insider. “Will the Stock Market Crash? This Hedge-Funder Thinks So,” declares New York Magazine.

And on it goes.

I suppose it makes sense, given that the S&P 500’s roughly 19% gain so far this year is a lot more than its typical return. Thing is, 2023 does not exist in a vacuum divorced from history, and just a tiny bit of history shows we’re not yet in a bull market, and stocks are not overheated, despite their recent gains.… Read more

3 Funds That Profit From “Economic Grumpiness” (Yields Up to 9.8%)

Michael Foster, Investment Strategist
Updated: November 27, 2023

Here’s something you might be surprised to hear: according to the numbers, the US economy is actually doing well—and yet (almost) nobody wants to admit it!

It’s a misconception we income investors can exploit with the three high-yielding picks we’ll cover below.

It’s a weird turn of events, but it makes sense. Since the pandemic, itself an event of shocking turmoil, it seems that the chaos around the world is getting worse, and our fundamental hope for humanity makes us think that this just can’t be good for growth.

Except that’s not how things typically play out.

Global Turmoil = Faster Growth?Read more

Trading Too Much? You’ll Certainly Miss This Shot at 13.5% Dividends

Michael Foster, Investment Strategist
Updated: November 23, 2023

With stocks on the upswing, the appetite for risk is back! That might tempt some folks to abandon sound long-term investing and take a stab at day trading.

Before we go too far into whether this is a good idea, I’d say that to be a successful day trader, you should be aiming to beat the market … and a lot of ink has been spilled about how active managers—and I’d include individual investors here—can’t do that.

Well, that’s nonsense. Plenty of portfolio managers and individual investors do beat the market regularly. Consider closed-end funds (CEFs), for example, which yield 7%+ on average, with plenty sporting histories of beating their benchmarks.… Read more

Don’t Let This “Taxman Head Fake” Cost You Thousands in Dividends

Michael Foster, Investment Strategist
Updated: November 20, 2023

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 likely headed lower from here—it’s just a question of when).

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. So 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

3 Ways to Buy Stocks (and Bonds) for Up to 37% Off

Michael Foster, Investment Strategist
Updated: November 16, 2023

Today I want to show you three funds that are highly unusual in a way that matters a lot to many folks: all three are free from a management-fee perspective.

In fact, these three funds—closed-end funds (CEFs), to be precise—are more than free: they have negative management costs!

What do I mean? Well, usually index funds sell themselves on being cheap. Fees on the Vanguard S&P 500 ETF (VOO), for example, are just 0.03%, or $300 in annual fees for every $1 million invested, in other words.

There are even funds out there that cost nothing, like the Fidelity ZERO Total Market Index Fund (FZROX), which has no expenses at all.… Read more