Author Archive: Michael Foster

This market crash has served up some terrific opportunities in closed-end funds (CEFs), many of which are throwing off safe 7%+ dividends today.

Dividends of that size, of course, are critical today, as we look to offset rising inflation. And I think we can all agree that a CD or Treasury will never match a payout like that.

But of course, not all CEFs are set to rise equally as the stock market continues to regain its footing (which I expect it to as we move through the back half of 2022), so we need to be careful about exactly which sectors—and funds—we target.… Read more

If you’re like me, you regularly hear from friends who brag about how they’ve successfully timed the market in the past. What these folks will never tell you is the number of times they’ve missed the boat!

Take last week, when millions of folks were parked on the sidelines, terrified (thanks to scaremongering media reports) that the July CPI print would come in worse than expected, triggering a selloff.

Of course, we now know that the exact opposite happened—and I’m guessing you won’t hear from your friends who failed to grab that bounce!

Look, when other folks do manage to pull off this trick, I salute them.… Read more

American novelist William Faulkner once said, “In writing, you must kill your darlings”. It was a warning to other writers not to get too attached to their manuscripts, or their characters, because you always need to be willing to edit and cut down your work to make it truly brilliant.

That advice applies to investing, too. I’ve seen too many investors get emotionally attached to their stocks and funds, which causes them to hold on to losers for too long—or fail to accept that the world has changed. But if we want to minimize our losses (and of course, we always do!),… Read more

I’m always shocked when dividend investors ignore tech stocks. Which means I’m shocked a lot, because pretty well all income-seekers do it!

That’s because most folks still think of technology as the home of profitless startups, crumbling crypto platforms or zero-dividend names like Tesla (TSLA) and Amazon.com (AMZN).

But the truth is, big caps dominate the tech space, and on the whole, the sector is sitting on some of the biggest cash hoards on Wall Street. Apple (AAPL), of course, holds a legendary $202 billion. As of February, that amounted to more than 7% of the cash holdings of all S&P 500 companies!… Read more

Over the last few months, I’ve seen dividend investors make the same mistake over and over: they constantly forget that the stock market always looks forward, not backward.

Making this easy blunder now could cost you a chance to grab cheap 7%+ dividends in closed-end funds (CEFs)—and potentially set yourself up for years of steady cash payouts and price gains.

Shaking Off “Investor Shell Shock”

I know it’s tough to believe in this market bounce after the many cruel twists stocks have dealt us this year. And to be honest, it could take a long time for the market to fully find its footing.… Read more

One nice thing—and probably the only nice thing—about the 2022 market selloff is that it’s given us dividend investors an opportunity to grab 10% yields we can count on for the long haul.

They come to us from closed-end funds (CEFs), a (too) long-neglected asset class that, frankly, is looking better and better every day for those looking to retire on dividends alone—and frankly we all should be.

I do want to emphasize the long haul here, though, because at this stage of the market correction, you can put some money to work effectively, either by picking up individual funds here and there or by dollar-cost averaging (DCA) to build up your income stream (and portfolio) at a reasonable price.… Read more

I get a lot of readers asking me when this market will bottom. We don’t know for sure, of course, because market bottoms are only visible in hindsight. But I would say that now is a good time to buy dividend-paying stocks—especially if you use dollar cost averaging (DCA), which you probably used to build your portfolio.

DCA (or buying a fixed amount on a fixed date throughout the year, say) is particularly effective for high-yield CEFs, which are, of course, our beat at my CEF Insider service.

That’s because of these funds’ above-average dividends and deep discounts to net asset value (NAV, or the value of the stocks in their portfolios).… Read more

When oil spikes, like it has in recent months, many folks get tempted, wondering if there’s a way to time their way into—and out of—crude for maximum profits and dividends.

Unfortunately, timing markets is tough—especially the oil market, which is global and highly complex. Heck, the experts have trouble doing it! Consider this chart:

Bloomberg analysts looked at how the price of energy commodities trended over the last 20 years and how an index of energy-related investments performed over the same period. They found that professional investors whose job is to turn changes in commodity prices into cash profits had a hard time doing so.… Read more

Today we’re going to look at how we can play the market’s “fear gauge”—known as the VIX, for a 7.5% dividend that’s as steady as they come.

As you can guess, the VIX has been on the rise this year as the Fed-induced market selloff has deepened:

Fear Gauge Rises. A Plus for Our Dividends?

You can’t outright buy the VIX, and even if you could, you wouldn’t get any dividends from it. But there is an asset class that uses the higher volatility the VIX is showing us to generate extra cash, resulting in a higher (and safer) income stream for you: closed-end funds (CEFs) that sell covered-call options.… Read more

When it comes to high-yield closed-end funds (CEFs), I’m a big fan of the “three Ds”: discounts, diversification and—of course—dividends!

These days, a “3-D” portfolio is a snap to put together, with CEF dividends at multi-year highs and oversold discounts everywhere across the asset class.

Below, we’ll look at a three-fund, bargain-priced “3-D” CEF portfolio you can buy today. It yields 8% now and gives you the diversification you need to reduce your volatility—and collect your payouts in peace.

I know that preaching diversification at a time when bonds, stocks and everything else is down might sound a bit outdated, but over time, this time-tested strategy always pays off.… Read more