Author Archive: Michael Foster

I know, I know. This levitating stock market feels like a bubble that will burst any day.

So I get it if you’re nervous. And that’s actually a good thing. It pays to be wary when everyone else is throwing money at any asset—stocks included.

My take? Well, it might surprise you, but it’s this: We’re not in a bubble—AI-driven or otherwise.

But I get the fear—which is why we’re going to look at a two-step move that addresses it. This “best of both worlds” play gives us yields up to 8.2% and a hedge if, say, bullish analysts (like me!)… Read more

The AI data-center buildout is all over the news, and for good reason: It’s quite literally upending the economy.

That’s set up plenty of opportunities for us income investors to cash in. But in a moment, we’re going to talk about one specific fund we need to sell yesterday. It yields a sharp 9.9% now. The problem? It’s nearly 2X overvalued!

It’s easy to see what’s catching investors’ attention on the data center front: Investment in AI’s computing backbone is on track to contribute more to US economic growth than the American consumer.

To say that this is incredible is an understatement.… Read more

An intriguing article came across my desk recently, and it said something we income investors need to talk about.

It was a Q&A with Morningstar’s director of personal finance, Christine Benz—and it reinforced, to me, why now is the time to snap up one of the top (and 8.4%-yielding) picks from the portfolio of my CEF Insider service.

I encourage you to read this article. It’s mostly fine. But it contains one piece of advice I think will be widely misunderstood. At one point, Benz says:

“What we’ve seen from real estate equities is kind of a steady upward march in correlations with the broad US equity market over the past couple of decades, to the point where I really don’t see the diversification benefit.”

What if you could squeeze, say, a 70% dividend yield from a fast-growing AI stock like NVIDIA (NVDA) or Palantir (PLTR)?

Sounds great, right?

Instead of relying just on these stocks’ prices for your profits (since dividends are, frankly, the furthest thing from their CFOs’ minds), you get their returns as high-yielding dividends.

That’s something a new breed of ETFs is promising. These funds, which are gaining in popularity, hold just one stock—usually a Palantir, Tesla (TSLA) or NVIDIA—and trade options on that one stock to deliver stated yields often way above 50%.

Does it work?

First, let me say that, as someone who has covered 8%+ yielding closed-end funds (CEFs) for over a decade, I get the sentiment behind these funds.… Read more

Small caps are (finally!) back, but most people are in the dark about how to tap them for serious dividends. But there is a proven way to do that—one that puts a rich 7.1% payout squarely on the table for us.

Everyone has missed this one. We’re going to dive into it today.

The main reason I hate to see people ignore small caps—especially now—is that, well, their time has come.

Small Caps Have Lagged for Years—And They’re Due for a Bounce

As you can see, It’s been a solid decade of small-caps delivering, well, small profits to investors. But it’s time for the script to flip.… Read more

Near the end of 2022, a reader wrote in to tell me that my bullish view of the economy at the time was off the mark. From his vantage point, people were struggling, prices were soaring, and wages weren’t keeping up.

This reader wasn’t alone—it was around that time that Bloomberg wrote that the chances of a recession in the next year were 100%. So there was zero chance of avoiding one, in other words.

We all know what happened next: The economy and stock market took off. That translated into real gains (and high income) for the portfolio of my CEF Insider service.… Read more

$20 trillion.

That’s how much value has been added to the US housing market in the last five years. It’s a number so big it’s near-impossible to get your head around. And it’s a double-edged sword.

On the one hand, if you own a house, that house is worth more, and you’re richer as a result. But if you don’t, buying is expensive and comes with a higher risk of a price drop. That’s because this $20-trillion gain is a 57% increase since 2020, or 9.5% per year.

That is, simply put, unsustainable.

Which is why, today, we’re going to look at a way to hedge against this risk and collect an 8.4% dividend as you do.… Read more

At CEF Insider, we live for those times when a bad news story turns up a great dividend opportunity. And the headlines just served one up, putting a 12%+ dividend (in a hated sector, no less) on the table.

This special situation is intriguing because no one in America is talking about it. That’s because it comes from across the pond, in the UK. Specifically, I’m talking about one of the UK’s biggest insurers, Phoenix Group, pulling £22 billion (US$30 billion) from asset manager Aberdeen Group plc (SLFPY), reportedly to manage these funds in-house.

Aberdeen’s name might ring a bell if you’re a CEF Insider member, as we’ve held the firm’s funds in the past.… Read more

We’ve got a frankly, bizarre dynamic setting up in stocks right now.

Global stocks are clobbering their American cousins this year. But here’s the disconnect: This is happening even though US stocks are hitting all-time highs seemingly every day.

On the surface, it sounds like both of these can’t be true. But as we’ll see below, this setup makes total sense. We’ll also look at how we can play it for both offense—price upside, in other words—and defense (in the form of 8%+ dividends), too.

USA, USA, US … Wait a Minute …

Here we’re looking at the S&P 500, as measured by the SPDR S&P 500 ETF (SPY), in purple, compared to the Vanguard FTSE All-World Ex-US Index Fund (VEU), a good benchmark for global stocks (minus the US, as the name says), in orange.… Read more

We all know that stocks can rise on nothing but hype for long periods. But at the end of the day, it all comes back to one thing: profits! If they don’t rise, the stock will tank. It’s just a matter of time.

Consider the case of Peloton Interactive (PTON).

Pandemic Ends, Peloton Crashes

When the pandemic had everyone exercising indoors, speculators piled into the stock, hoping that soaring earnings would ignite the company’s value.

Peloton’s net income was deep in the red then. Fast-forward to today, and it’s still negative. The stock has, of course, dropped to reflect that.… Read more