Author Archive: Michael Foster

Inflation is falling—but is a recession next, or will we get that vaunted “soft landing” Jay Powell keeps talking about? Wouldn’t it be great if there was a dividend-payer built for either outcome?

Just such an income play exists—it’s called a covered-call closed-end fund (CEF). They’re smart buys now because they pay big dividends: the CEF we’ll break down today—the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX)—yields a healthy 7.8%.

That not only gives us a high income stream, but it also increases our safety, as we’re getting the vast majority of our return in safe dividend cash.

That’s one part of DIAX’s appeal—especially if a recession is headed our way (more on that shortly).… Read more

Let’s talk about this banking “crisis” one more time. Because even though it’s starting to fade from the headlines, it’s still giving us a terrific setup for 9% dividends and upside.

What we’re going to talk about today is the very essence of contrarian investing. I’m talking about profiting from the gap between what the media is (often breathlessly!) reporting and what regular folks on the ground actually think.

And if you’ve been to any news website lately, you could be forgiven for thinking this banking issue sounds like it could spark a mass panic and a bank run, taking down the economy with it.… Read more

With yields north of 7%, closed-end funds (CEFs) should be a staple of every American’s portfolio. Especially when you consider that the vast majority of these funds pay dividends every single month.

But the truth is, CEFs remain a niche product—only folks have taken the time to try them out realize what incredible income generators they are. (This is why I started my CEF Insider service: to bust the myths around CEFs and give members a selection of diversified funds they can use to build a retirement-changing income stream.)

Why are CEFs still off most people’s radar? Mainly due to the financial press and financial advisors, both of which have preached for decades that any yield of 7%, 9%, 10% or higher is unsustainable.… Read more

Here at Contrarian Outlook, we love to get questions from readers, and I recently got one from a CEF Insider member about commercial real estate, after Bank of America (BAC) recently said the sector could be the next one to tumble.

Let’s dive into that, because this fear has been driven by the same kind of overwrought media coverage we saw with regional banks (an issue that’s been addressed, by the way, with no depositors or taxpayers losing money).

And that fiasco, you no doubt know, gave us a nice “buy the dip” opportunity on, well, pretty well everything.

The media has set up these commercial real estate worries, too, and that’s highlighting the value of an 8.1%-paying closed-end fund (CEF) holding real estate investment trusts (REITs) we’ll talk about below (not to mention the five REIT CEFs in our CEF Insider portfolio).… Read more

Let’s be honest: despite today’s high interest rates, it’s still an income desert out there.

The 10-year Treasury yields 3.6%. That’s all right—much better than the 1% or so it dribbled out a couple years back. But it’s still not enough to really boost our investment income.

Which is why I’m urging all investors to take a close look at closed-end funds (CEF). You might’ve heard of these income plays. The key takeaway is that they offer much bigger dividends than stocks, ETFs or Treasuries: payouts north of 8% are common with CEFs. (The three we’ll get into below pay up to 10.4%, for example.)… Read more

On the surface, investing through an index fund sounds great. It’s simple, cheap and, as you’ve likely heard over and over, few active managers beat their benchmarks anyway.

But we closed-end fund (CEF) investors know better. Truth is, there are lots of CEFs out there that beat their benchmarks while throwing off healthy dividends north of 8%.

And when you step beyond the world of stocks, into areas like corporate bonds, REITs and municipal bonds, benchmark-beaters are the norm with CEFs. That’s because those markets, which are much smaller than the stock market, give a savvy manager lots of advantages—like a well-stacked contact book—that a “robotic” index fund just can’t match.… Read more

If there’s one thing we can be thankful for when it comes to the banking crisis, it’s this: at least it means fewer headlines about Fed rate hikes!

That’s actually a good thing for us, because, as the Fed statement hinted on Wednesday, the Fed is getting set to finally pivot. It’s the moment everyone has been waiting for all along! And it feels like almost no one is paying attention.

But we contrarian dividend investors are. And there are a couple of closed-end funds (CEFs) out there that are well-positioned to profit from the Fed’s quiet shift: the Nuveen S&P 500 Dynamic Overwrite Fund (SPXX) and the Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX), which yield 7.8% and 7.3% respectively.… Read more

Once folks get a taste of closed-end funds (CEFs), they typically rave about one thing: the dividends! Yields of 7% and up are common with CEFs, and they often come your way monthly.

We also love the fact that even though CEFs are a small corner of the market (with only about 500 or so out there), we can build a diversified portfolio with them: there are CEFs that hold US and international stocks, bonds, real estate—even private equity. You name it.

This broad range gets us around a problem most income-seekers face: being forced to stake significant sums in one, or a handful of, stocks just to get big payouts.… Read more

We’ve got some superb dividends sitting in front of us in CEFs right now—as I write this, these funds yield an incredible 7.9%, on average!

That’s way more than Treasuries (especially after their yields were pummeled last week). And far more than the 1.3% dribbled out by the typical S&P 500 stock.

Best of all, many CEFs hold the same stocks you likely hold now—including household names like Apple (AAPL) and Microsoft (MSFT). So you likely won’t have to ditch your current holdings to get into these funds.

Those high dividends, as you can likely imagine, get a lot of attention from investors—so much so that some may be tempted to try a technique known as “dividend capture” with CEFs.… Read more

The Silicon Valley Bank (SIVB) mess has demonstrated exactly why we need to invest in closed-end funds (CEFs): these funds yield 8.1% on average, giving us an income stream that can get us through market volatility, like we’re seeing now.

In fact, the SIVB failure shows one of the often-underappreciated aspects of CEFs: when you hold a diversified portfolio of these funds, you’re getting exposure to thousands of stocks, bonds, REITs and many other asset classes.

So even if you have an SIVB hidden in there somewhere, it will have little—and likely no—impact on your overall returns. (And subscribers to my CEF Insider service don’t need to worry—none of our funds have exposure to SIVB, and none have exposure to regional banks suffering from the contagion.)… Read more