Author Archive: Michael Foster

I recently got some reader feedback that made me realize something: When it comes to our favorite income investments—8%+ yielding closed-end funds (CEFs)—there are still a lot of misconceptions out there.

It’s key that we put those right, because they’re causing some investors to miss out on CEFs, and the big (and often monthly) dividends they provide. And I know I don’t have to tell you that in turbulent times like these, high payouts like those are a lifesaver.

This reader wrote in response to a recent piece I wrote about how CEFs can be better than ETFs, pointing out two things:

1. The three CEFs I mentioned in the piece have higher expense ratios than passive funds.

When it comes to the economy, we’re in a bit of a weird spot: The data tells us that, despite inflation fears, interest rates are likely to fall in the year ahead.

Falling rates point in one clear direction for us contrarian income-seekers: corporate bonds. Our preferred way to tap into them? Discounted closed-end funds (CEFs) with big dividend yields.

If investors know any corporate-bond CEFs at all, they probably know the PIMCO Dynamic Income Fund (PDI). It’s the biggest of the bunch, with a $5.1-billion market cap and a monster 13.3% yield.

With that in mind, PDI is a good gauge of investor interest in corporate-bond CEFs, and that interest is booming, as we’ll see in a moment.… Read more

There’s no doubt it’s been a rough couple weeks for stocks: Both the S&P 500 and the tech-focused NASDAQ  have wiped out most of this year’s gains, as of this writing.

Stocks Reverse Across the Board

The bigger decline among the NASDAQ, compared to the S&P 500, is notable here because the NASDAQ involves both higher risk and higher reward: With a heavier focus on tech stocks, it’s more volatile than the more diversified S&P 500.

But it also reflects where many of the higher profit margins have been among US firms. Hence, it has outrun the S&P 500 for a long time.… Read more

Here’s where I see stocks now: Yes, we’ve got some legitimate concerns as some economic warning signs appear—and run up against the tech-driven optimism that’s powered stocks to lofty heights.

The result? Volatility.

So today we’re going to look at a couple quick moves we can make to both protect ourselves and tap into the bargain income opportunities—including a 10.6%-paying closed-end fund (CEF)—that times like this always turn up.

For that, we’re really talking about two things.

First up, we’re going to add income plays beyond stocks. Specifically, we’re going to look at corporate bond–focused CEFs, many of which are paying double-digit yields and are poised to tack on serious price gains as the economy slows.… Read more

Today we’re going to use a simple strategy to (legally!) beat the tax man. The key is a (too) often-ignored group of funds whose dividends are beyond the reach of the IRS.

The low-risk assets behind this income stream really should be part of any income investor’s portfolio. And the three funds we’ll discuss below, which yield up to 7.3%, are a great place to start. Thanks to their tax-free status, their “real” yields will likely be considerably more for us.

Enter “Boring But Beautiful” Municipal-Bond Funds

Here’s the truth on taxes: If you’re an American and you receive any kind of income, you’re going to get taxed.… Read more

We contrarians love a beaten-up corner of the market—especially these days, when cheap stocks (and funds) are so thin on the ground.

Right now, real estate investment trusts (REITs) are that corner of the market: unloved, cheap and boasting high, stable dividends. And they have even more appeal with interest rates stabilizing and likely to move lower over time.

We’re not taking advantage of this opportunity by purchasing our REITs individually or through an ETF, though. Instead, we’re looking to REIT-holding closed-end funds (CEFs). These income machines, kicking out 8%+ dividends, are no less than my top contrarian income plays for 2025.… Read more

If you’re like most income investors, you’re on the hunt for stocks and funds that can stand up to a storm these days.

So that’s what I’m going to give you below—in the form of three “all-weather” closed-end funds (CEFs) kicking out an outsized 6.8% average yield.

They’ve stood firm through every headwind imaginable—wars, pandemics, inflation, you name it—and have done nothing but profit over the long haul. Through all that, this trio has kicked out annualized total returns (with dividends reinvested) of 15%+ each.

“Shock-Proofing” Your Portfolio, Crushing ETFs

These funds’ stellar returns come from both the sector they focus on—tech—and smart management that’s kept all three going strong.… Read more

No two ways about it: This stock market is getting twitchy, and it’s (frankly beyond) time for all investors to take it seriously.

Trade wars. The possibility of spiking inflation. The Fed’s “will they or won’t they” act around rate cuts. And then there’s the ongoing doubt about whether AI will deliver on its big profit promises.

Our 3-Step Volatility Plan: Boost Income, Cut Taxes—and Go Beyond Stocks

We’re all feeling it: The market heads higher, and every day it does, the voice in our head telling us that a fall is around the corner grows just a little bit louder.… Read more

We’ve got three big trends—two that investors know about and one many don’t—setting us up to grab double-digit dividends in real estate investment trusts (REITs).

Now is the time to make our move. Let’s get under the hood of this opportunity and stake out a simple strategy.

Start With the Obvious

REITs have lagged since the COVID-19 pandemic, with the benchmark SPDR Dow Jones REIT ETF (RWR) returning around 17% since the start of 2020, as of this writing.

This shakes out to a 3.3% annualized return over half a decade, well off RWR’s 8.6% average yearly return since its 2001 IPO.… Read more

Trade tensions ratcheted up to 11 this week, and I know that for many readers the wild swings we’re seeing can feel sickening.

To you, I say that times like these are exactly why we hold the closed-end funds (CEFs) in our CEF Insider portfolio. Their high, steady dividends (more than 10% on average across the portfolio) let us collect our income while stocks regain their footing.

We also avoid the trap of panic selling, then seeing the story whipsaw the other way, locking in our losses (which would’ve happened if you’d hit the sell button first thing Monday morning).… Read more