Author Archive: Michael Foster

Investment Strategist

Recession? No Recession? This 8.2% Dividend Doesn’t Care

Michael Foster, Investment Strategist
Updated: June 8, 2023

The recession everyone’s been worrying about is still a mirage—and there’s a good chance it won’t become reality for a long time yet. That’s given us a nice momentum play in one closed-end fund (CEF) throwing off an outsized 8.2% dividend.

Here’s what I mean by “momentum” play: the stock market is only now waking up to the fact that the recession appears to be on ice for the foreseeable. Yet at the same time, those recession fears have left us with some terrific discounts in CEFs.

These “delayed reaction” buys—including the ticker we’ll discuss below—won’t last.

I say that because the signs are all there for continued market gains—even if the media is working overtime to tell us otherwise.… Read more

From the Depression to Disco: These “Old-Timer” 8% Dividends Have Seen It All

Michael Foster, Investment Strategist
Updated: June 5, 2023

Let’s face it: yields on Treasuries and “regular” stocks are still pathetic! We need much bigger payouts (I’m talking yields of 7%+ here) to fund our lifestyles in these inflation-weary times.

Trouble is, most of us have been conditioned by the media and Wall Street to believe that all yields that big are dangerous. Nothing could be further from the truth!

Case in point: my favorite high-yield vehicles, closed-end funds (CEFs), which hold all the assets most folks own, like blue chip stocks, corporate bonds and real estate investment trusts (REITs). Except when we buy these assets through CEFs, we get much higher yields than we would if we bought “direct.”… Read more

This “Head Fake” Market Is Begging Us to Buy These 9%+ Dividends

Michael Foster, Investment Strategist
Updated: June 1, 2023

Don’t let the debt-ceiling fracas (or whatever doomsday scenario the media is obsessing over on any given day) distract you: this economy is better than it’s been in years—even if that hasn’t (yet) shown up in the stock market.

This disconnect between what the media is preaching and the facts on the ground is more than a fact—it’s an opportunity for us contrarian dividend investors. And we’re going to exploit it with our favorite investments: bargain-priced (and high-yielding!) closed-end funds (CEFs).

Thanks to all the irrational gloom out there, many CEFs still trade at attractive discounts. As the public comes around (and the data we’ll look at next shows they are), CEFs are likely to rise, both because of their low valuations and gains in the broader market.… Read more

3 Cheap (and Tax-Free) Dividends That Love Debt-Ceiling Drama

Michael Foster, Investment Strategist
Updated: May 29, 2023

Few folks realize it, but there’s a great place to invest our money to profit from “DC drama” like the debt-ceiling fiasco. It’s literally hiding in plain sight.

I’m talking, oddly enough, about government debt! But not federal-government debt. Instead we’re going to bypass DC and go with municipal bonds, which are issued by sleepier (in a good way!) state and local governments to pay for infrastructure projects.

Because here’s what most folks don’t realize: “munis” do great when political shenanigans abound in DC. To see what I mean, think back to 2011, another period when a Republican House and a Democratic president scrapped over the debt ceiling.… Read more

This 7% Dividend Is the Smartest Way to Play the Debt-Ceiling Drama

Michael Foster, Investment Strategist
Updated: May 25, 2023

There’s a lot of rhetoric flying around about the debt ceiling these days, and it’s set up a very nice opportunity for us to buy a 7%-yielding closed-end fund (CEF) we always have on our watch list.

That would be the Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX). 

A good way to think of QQQX is like a NASDAQ index fund but with higher dividends and a smart way to turn volatility into extra dividend cash. I say QQQX is like a NASDAQ index fund because its holdings mirror those of the Invesco QQQ Trust (QQQ), including all the big-cap techs we all know well:


Source: Nuveen

QQQX, like QQQ, tracks the NASDAQ 100, so it’s no surprise that you’ll see great tech firms in its portfolio.… Read more

Buy a Fund With These 2 “Mystery Ingredients” for 10%+ Cash Payouts

Michael Foster, Investment Strategist
Updated: May 22, 2023

When I talk to investors about closed-end funds (CEFs), I get an almost universal reaction: they simply can’t believe the outsized dividends—and upside potential—these funds boast are for real.

I’ll admit, if you’re not familiar with CEFs, their many benefits do sound a bit over the top: a pocket of funds that yield 7.5% on average, yet hold investments we’re all familiar with, such as shares of Alphabet (GOOGL) and Mastercard (MA)? 

The outsized payouts seem particularly unreal when you consider that most of these blue chips pay low (or no) dividends themselves. And that’s before we get into the fact that CEFs can hold a range of other investments beyond stocks, like corporate bonds, real estate investment trusts (REITs) and municipal bonds.… Read more

These “Active” 7%+ Dividends Crush Index Funds

Michael Foster, Investment Strategist
Updated: May 18, 2023

You just can’t argue with the power of index investing, right?

After all, index funds boast ultra-low fees and simply track the market. And since stocks return about 7% per year on average, you should do well in the long run. Vanguard, founded back in 1975 on this very idea, built a massive firm (current assets under management: $7.2 trillion) on it.

And to be honest, for many folks, index funds do work. The company’s Vanguard S&P 500 ETF (VOO) is a go-to in the space, along with rival Select Sector SPDRs’ SPDR S&P 500 ETF Trust (SPY). (Though I always prefer VOO due to its lower fees; when you’re simply tracking the index, fees matter a lot.)… Read more

Retire Early With This Dividend-Paying “Compound Interest Machine”

Michael Foster, Investment Strategist
Updated: May 15, 2023

We need to talk about “financial independence” for a second. It’s one of those catch-all terms you see a lot in financial-industry marketing, for good reason: it means completely different things to different people.

Maybe your idea of financial independence is having a bit of extra income on the side, to go with a regular job you love. Or maybe you want to work only on the projects you like, without the unreasonable boss and 9-to-5 grind. Heck, maybe you want to clock out completely.

Me? I’m a big fan of picking projects I want to do—and I’ve accomplished that in my forties, thanks to the 8%+ yielding investments I want to take you on a guided tour of today: closed-end funds (CEFs).… Read more

How We’ll Play the Market’s “Fear Gauge” for 7%+ Dividends, Upside

Michael Foster, Investment Strategist
Updated: May 11, 2023

Look, we’re all contrarians here at Contrarian Outlook. It’s right in the name, after all. But even we contrarians have to pick our battles. Because sometimes what sounds like a canny contrarian move can turn out to be, well, too cute by half.

A good example is buying counter to the VIX, which you may know as the market’s “fear gauge.” It’s a common contrarian belief that when the VIX is low (as it is today) and the market is relatively calm, it’s a good time to sell. And when the VIX is high, and mainstream investors are in a panic, it’s a good time to buy.… Read more

This 3-Buy Portfolio Could Let You Retire Fast (With $4,375 a Month)

Michael Foster, Investment Strategist
Updated: May 8, 2023

Let’s say we want to quit working and attain financial freedom—not in decades, but in just a few years. Or heck, maybe less. How do we do it?

One “must-have” is the need to clock out on dividends alone. It’s the only way to retire without being forced to sell stocks into a downturn, shriveling our wealth and income at the same time.

To hit our “dividends-only” retirement goal, then, we’d need a minimum yield of 8% on our $500K. That way we’re assured of banking at least $40,000 in dividends a year. But with inflation still “sticky,” we’d ideally like to do better—pulling in around $50,000 or more.… Read more