Author Archive: Michael Foster

When it comes to closed-end funds (or any investment, for that matter), it pays to look for things most people misunderstand. Because these (seemingly) tiny investor oversights and errors can give us keen-eyed contrarians our best buying opportunities.

And when it comes to CEFs, there’s one all-too-common mistake I see folks make time and time again, particularly those who are new to these high-yielding funds. To see what I’m getting at, let’s zero in on a CEF called the Columbia Seligman Premium Technology Growth Fund (STK).

STK Romps to a Triple-Digit Return

STK’s portfolio mainly consists of large-cap tech stocks: Apple (AAPL), chipmaker Broadcom (AVGO) and Microsoft (MSFT) are among its top holdings.… Read more

When I was a kid, I thought everyone on TV was rich. I know better now, of course, but it still strikes me when I hear stories of celebrities going broke, struggling to earn a living or taking on projects just because they desperately need to pay off some kind of debt.

It just goes to show that being famous isn’t enough to have true financial freedom.

That’s why I was intrigued by a recent interview with That ’70s Show star Ashton Kutcher, who has built a name for himself in the VC world by investing in tech startups. Kutcher’s string of successes is impressive: he was an early investor in Uber, Airbnb and Spotify, for example.… Read more

From what I can see, this year is setting up to be another 2016—and that’s likely to hand us a buying opportunity in our favorite high-yield investments: closed-end funds (CEFs).

Here’s what I mean: after the market’s fast run higher in January, things have stalled out a bit. After the year we put in last year, this means we’re still left with some decent discounts to net asset value (NAV) on CEFs, as well as high yields (as CEF veterans know, payouts of 7% and up are common in the space, and most CEFs pay dividends monthly, too).

Right now, for example, our CEF Insider portfolio boasts a number of double-digit yields, reaching up to 12.3%.… Read more

Recent headlines have spurred some readers to write in about China—specifically what rising tensions between Beijing and Washington (no thanks to the former’s ham-fisted spy-balloon fiasco) might mean for their portfolios.

First up, we always need to bear in mind that stocks—and in particular my favorite way to hold stocks (through a high-yielding closed-end fund, or CEF)—really are a long-term investment. I know that sounds obvious, but it can be easy to forget when alarming headlines—a war or a pandemic, say—flash across our screens.

In other words, global chaos is really nothing new for stocks. The difference today is that we’re more connected than ever, so every move made by one of America’s adversaries is emphasized all the more.… Read more

With the markets off to a hot start so far this year, it’s only natural to think things just might be getting a little toppy.

I get it—and the truth is, this market is not without the risk of a short-term pullback.

Here’s the good news: if this possibility has you worried, there are a few closed-end funds (CEFs) out there that are perfectly designed for this risk. And they’re trading at attractive valuations, while paying big dividends, too. We’ll delve into one particular ticker a little further on. It’s a “goldilocks” fund that yields a steady 7.3% and charts a steady course through any volatility we might hit in the near term.… Read more

We’ve seen a big bounce (and 12%+ dividends!) in one particular type of closed-end fund (CEF) this year—and all of my buy indicators suggest this profitable play is still in its early stages.

Specifically, I’m talking about tech-focused CEFs—which we’re getting a nice second chance to buy thanks to last week’s earnings whiffs from the likes of Apple (AAPL) and Alphabet (GOOGL).

Buying a tech CEF is like buying an ETF that focuses on technology, but with two key differences:

• Big dividends: the CEF we’re going to analyze today yields 12.1%—and it pays dividends monthly, too. You and I know that both of these things are unheard of in the world of “regular” stocks and funds.

We’ve been getting a number of questions from CEF investors in the last few weeks about return of capital, or ROC.

This is a measure that shows up regularly with CEF dividends—and it makes many folks wonder if their funds are simply handing back the money they’ve invested as part of their payout.

(Note that much of what we’re going to discuss below is tax related. I’m not a licensed tax professional, so I can’t give you tax advice. You should consult a tax professional for details on your own personal situation.)

First, let’s be clear that all CEFs that are publicly traded on US exchanges are actively investing in something, with funds specializing in municipal bonds, real estate, stocks, preferred shares, real estate investment trusts (REITs) and other assets.… Read more

Imagine what you could do with a 19% dividend.

To be clear, any dividend that high simply isn’t sustainable. So if you do see one, I don’t recommend buying.

Still, the thought’s nice. With a 19% yield, financial independence becomes easy. Want to live on $60,000 per year? Well, conventional wisdom says you’ll need at least $1.5 million to generate that kind of income, and some advisors will tell you to save $2 million, just to be safe.

But a 19% dividend? Suddenly it only takes $316,000 in savings to secure $60,000 in yearly income. That cuts down how long one needs to work and save by decades.… Read more

These days, it seems like every investor is chasing that one big thing that will make them rich—the newest stock, technology, fad or whatever.

We contrarian dividend investors know these folks well—you probably have a friend or family member who chased down gains in crypto, NFTs, profitless tech or heaven knows what else over the last few years.

Heck, they may have even taken a poke or two at you about your “boring” dividend stocks and closed-end funds (CEFs)!

Then 2022 came along. And while everything got hit last year, we CEF investors had the last laugh, as we could use our funds’ 7%+ dividends to pay the bills.… Read more

As I write this, stocks are in the process of giving back some of their “New Year’s bounce”—and I’m hearing from folks who are worried that 2023 will be another 2022.

I get it—it’s only natural to feel that way after the S&P 500 fell some 20% in a year. And those who limited themselves to the tech-focused NASDAQ took it particularly hard—off some 30%+ in ’22.

But just because the market is off to an uncertain start does not mean we’re headed for another mess like last year. In fact, the odds of that are very low.

For one, it’s rare to get two bad years in a row.… Read more