Author Archive: Michael Foster

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

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

If you always wanted a free lunch but thought they don’t exist, well, they kind of do, in the form of the Fidelity group of ZERO index funds, like the Fidelity ZERO Total Market Index Fund (FZROX).

After all, its 0% fees mean it should easily beat a closed-end fund (CEF) with a high expense ratio, right? Well, not so fast.

0% Fees Do Not Equal Outperformance

FZROX—in purple above—may levy no management fee, but it’s underperformed many equity CEFs over a long period. Since inception, it’s trailed the Adams Diversified Equity Fund (ADX), in blue, and the General American Investors Co.… Read more

We’ve got clear proof that our favorite income funds—closed-end funds (CEFs), which yield 8% and up—are still well behind the rise we’ve seen in the S&P 500, and set to make up that ground.

While I can’t tell you exactly when that bounce will happen, we’re going to dive into the reasons why it’s very likely today. And, anyway, timing doesn’t matter too much to us at CEF Insider because we’re happy to use this time to buy our portfolio’s high dividends, which yield up to 13.7% as I write this.

The “Scared Retail Investor Lag Effect” and Our CEFs

Sadly “SRILE” doesn’t sound too appealing as an acronym, so I don’t think I’ll become famous for inventing it.… Read more

Not many people realize it, but there’s a way you can actually get paid to own stocks.

I’m not talking pennies, either. The fund I’m about to show you is capable of generating $64,000 in dividends per year on a $500,000 investment, thanks to its 12.8% yield, as of this writing.

This gives us three things:

1. A large, reliable income stream with a lower risk of principal loss (unlike many annuity products and other income funds out there, where loss of principal is guaranteed).
2. Diversification across over a hundred companies in one of the most oversold sectors today: technology—including firms driving the AI revolution, like Nvidia (NVDA).

Imagine a fund yielding 16.2% that’s likely to keep that high payout steady for years and years. I know it sounds unthinkable, yet we have just such a fund sitting in front of us today—ripe for buying at a discount, no less.

That would be the PIMCO Dynamic Income Fund (PDI), a bond fund throwing off that 16.2% payout, as of this writing. PDI uses a variety of credit investments to produce that outsized income stream. Thanks to high interest rates that look set to stay high for some time, and thanks to a sudden drop in the fund’s valuation, that income stream is sustainable.… Read more

I hate to see investors get snared by so-called “rules of thumb” like the 4% rule (which we’ve debunked here on Contrarian Outlook many times before).

The trouble is, these rules only “work” until they don’t. And blindly following them through an unexpected market turn could lead you to investment losses, or to run out of money in retirement.

Heck, some don’t even have a germ of truth to them, like the “100 minus your age” rule, which says you should subtract your age from 100, and that’s how much of your portfolio you should dedicate to stocks. So if you’re 30 years old, 70% should go into stocks and 30% into bonds.… Read more

It was the best of times, it was the worst of times. No, I’m not talking about Dickensian London—I’m talking about the mood among investors in our favorite high-yield investments, closed-end funds (CEFs), these days.

Those of us who know what to look for in CEFs are finding a rich hunting ground of big dividends. Yields are up—our CEF Insider portfolio yields an average of 10.2% today—and we’re in a good position to book longer-term profits due to the big discounts still available. (We can thank the cautious folks who invest in CEFs for that—they’ve been slower to buy back in after the 2022 pullback, due to alarmist media headlines.)… Read more

The hardest part of convincing folks they can lock in high dividends for the long haul (I’m talking 9%+ yields here) is that many just don’t believe it.

And frankly, I can’t blame them. Too many people are paid a lot of money to tell investors that yields like that are impossible. But the truth is you can get a 9.5% yield today—and even more. But even at 9.5%, we’re talking about a middle-class income of $4,000 per month on an investment of just a touch over $500K.

Source: CEF Insider

Below, I’ll reveal how to start building a portfolio that could get you an even bigger income stream than this today.… Read more

Look, I’ll be honest: I’m bullish on our favorite income investments, high-yield closed-end funds (CEFs), as we head toward 2024.

Fact is, these overlooked income stalwarts are still on sale after the 2022 pullback, with the ticker we’ll talk about below going for an absurd 17.2% below its true value.

We can thank CEF investors’ conservative nature for that—they still don’t trust this year’s rebound. So our chance to grab big payouts at a discount is still available. Right now, the portfolio of my CEF Insider service is generating a rich 9.9% average yield.

But that said, we always need to keep an eye on factors that could go sideways in the future, so we can shift gears—and protect our capital and income streams—at a moment’s notice.… Read more