Author Archive: Michael Foster

Members of my CEF Insider service and I always look for big dividends we can collect for the long haul. I’m talking 8%+ payouts here, many of which come our way monthly. (This is possible with CEFs, and these funds’ discounts to net asset value, or NAV, give us some nice upside to go along with those payouts).

By thinking long term, we give our CEFs’ discounts the time they need to close, propelling their share prices higher. (There are exceptions to this, however, such as with covered-call CEFs, which do better when markets are volatile—we tend to swing in and out of these as volatility ebbs and flows.)… Read more

At CEF Insider, we focus on digging up strong 8%+ yielding closed-end funds that are based here in the US. Even our international picks have a solid base in America!

The 2022 mess has vindicated this strategy and helped protect our dividends from the many messes beyond America’s borders, like the collapsing UK economy, continued COVID-19 shutdowns in China and, of course, Russia continuing to prosecute its despicable invasion of Ukraine.

To be sure, America isn’t an island: all these problems have a knock-on effect on our economy, too. Not to mention the Fed, which is raising rates faster than almost any other central bank in the world.… Read more

This selloff has set up a very rare opportunity to bag 12%+ yields in closed-end funds (CEFs). I’ll reveal three names and tickers you’ll want to target now in just a second.

This chance to kickstart a steady 12%+ income stream exists because CEF buyers are a conservative bunch, so these funds’ downdrafts have been amplified this year. (This also means that income-hungry CEF buyers tend to buy back in quickly, driving these funds to fast upside after a drop).

The upshot here is that all 500 or so CEFs in existence are sporting an average discount to net asset value (NAV, or the value of their underlying portfolio) of 7.5%—making them cheaper than they’ve been in nearly a decade.… Read more

I hate to hear about investors using “rules” like the 60/40 portfolio (where you devote 60% of your holdings to stocks and the rest to bonds) to invest their hard-earned cash.

The problem with “rules” like this one is that they lack the ability to adjust to changing markets, like the mess we’ve been living through this year, which has walloped stocks and bonds in equal measure.

Advisors See the Light on Oversimplified “Rules” Like the 60/40 Portfolio

It seems like advisors and the business media are finally accepting this hard truth. Recently, banks like Goldman Sachs (GS) and JPMorgan Chase & Co.… Read more

For some folks, it’s almost a reflex to buy gold when inflation hits or volatility ramps up. In times like those, they simply flock to the yellow metal—no questions asked.

But buying gold as a safe haven is a terrible idea, for one simple reason: it doesn’t work.

The dumpster fire year we’re living through now provides an excellent example of gold’s ineffectiveness as an inflation hedge: while inflation soared (it sits at 8.3% as of August), gold has gone the other way, plunging 6.4% since January 1.

That lousy performance isn’t just a one-off. Gold has actually fallen 7% in the last decade.… Read more

Plenty of folks are starting to look toward the new year, and I’m getting a lot of questions about my outlook for high-yield closed-end funds (CEFs) for the rest of ’22 and into ’23.

Of course, no one has a crystal ball when it comes to CEFs, stocks or the economy in the short run, but my take is that we’ll likely see continued volatility in the back end of 2022, with better conditions in 2023, as the so-called “terminal rate” of the Fed’s hiking cycle comes into view.

Luckily, there are CEFs out there called covered-call funds that are purpose-built for this environment, handing us safe 7%+ dividends that actually get stronger when volatility picks up.… Read more

The US consumer just got a $162-billion “pay raise,” and I’m betting you haven’t heard a word about it. Today, we’re going to tap that “extra” cash through a 6.6%-yielding fund that trades at 87 cents on the dollar.

What I’m getting at is the good news story we’ve heard little about in the media: the extra cash consumers are pocketing thanks to the recent plunge in gasoline prices.

It’s no small amount, either: according to Mark Zandi, chief economist at Moody’s Analytics, US households save about $125 billion in total for every dollar the price at the pump drops. And with average pump prices now around $3.70 a gallon, down from north of $5 in June, we’re looking at about $162 billion being thrown back into the economy, or around $13 billion a month. … Read more

Today we’re in a situation that looks a lot like 2016. And back then, some savvy contrarians tapped it to grab quick 62%+ returns. The same setup is back again—and so is our chance for more upside, plus yields north of 10%.

There are two closed-end funds (CEFs) poised to deliver those high yields (and overall returns); we’ll compare two popular options in a moment. First, let’s delve into the state of the corporate-bond market, because there are a lot of misconceptions floating around right now.

“Junk” Bonds Not as Risky as They Seem

You might know high-yield bonds by their nickname: junk bonds.… Read more

Municipal bonds are too often ignored by investors. Which is a huge missed dividend opportunity.

It’s too bad, because billionaires have been using “munis” to anchor their portfolios for years. And with good reason: as we’ll see in a second, munis can perform well when rates rise. They also pay a high “hidden” yield that beats anything you’d get on a Treasury—and most stocks.

“Munis” Offer Safe, High—and Tax-Free—Yields

I say munis’ yields are “hidden” because they’re tax-free. If you’re in a high tax bracket, I probably don’t have to tell you how valuable a tax-free yield is, but the numbers here are very compelling.… Read more

Some major—and almost totally ignored—news from Washington, D.C., is about to upend the biotech world, turning America into “the world’s pharmacy” in short order—and giving us a chance to buy a solid 6.8% dividend for just 91 cents on the dollar.

That might sound hard to believe for woebegone biotechs, which have fallen further than the S&P 500 this year, going by the performance of the benchmark iShares Biotechnology ETF (IBB). That’s despite the sector’s importance during the pandemic—and despite the fact that some 10,000 Americans turn 65 every day, sharply increasing demand for pharmaceuticals as the senior cohort grows.

Biotech Catches a Cold

The problem is that despite these tailwinds, biotech is weighed down by the same problems that are dragging on the rest of the economy: lower R&D funding as interest rates rise, and supply-chain issues that are hurting productivity.… Read more