Author Archive: Michael Foster

Over the last couple of years, we’ve seen a quiet trend in investing—and today we’re going to tap into it with two funds yielding near 10%.

That’s right: enough to pay you back just shy of 10% of your initial buy a year in dividends alone.

What’s more, these two income plays—closed-end funds (CEFs), to be precise—have been around for nearly a century, with one dating from 1927 and the other having launched in 1929. That last date, of course, is notorious, as it heralded the start of the worst market crash in history.

I bring these two CEFs up now because their long institutional memory gives them a level of reliability that few other funds can match.… Read more

Here’s some good news in these uncertain times: Most investors who’ve invested for the long haul are well-equipped to deal with this selloff. That’s because, over the last five years, stocks have been on an absolute tear.

In that period, the S&P 500 has delivered an average annual total return of 19.1%, as of this writing. That’s more than double the average of about 8% in the last century.

Looking at Various Time Frames Can Skew Our View

Think back five years for a moment. Back then, the stock market’s prospects looked bleak, indeed, as we were at the beginning of the pandemic-driven selloff.… Read more

The market pullback we’ve seen in the last couple of weeks really hasn’t come as a surprise to me. The economy is sending what you could—at best—call mixed signals right now. And stocks, as they do in uncertain times, are reacting.

I expect more volatility ahead, so today we’re going to talk about ways to protect ourselves while maintaining the 8%+ dividend streams we’re drawing from our favorite closed-end funds (CEFs). (Read: We’re not going to cash here.)

Instead we’re going to focus on a strategy that’s been around as long as investing itself—diversification—by putting a bit more weight on assets beyond stocks.… Read more

For years, it’s been a struggle to try to convince many US investors to spread some of their money abroad.

It’s only natural: We simply tend to favor the familiar—our home country—over others. Investors the world over have this natural bias.

But that’s been slowly changing in recent months. Which is great news, because diversifying internationally is a particularly smart move in times like these.

Moreover, when you diversify—especially through 8%+ yielding income investments like closed-end funds (CEFs)—you can easily rebalance your holdings in line with changes in the market, moving more into US stocks when they’re low, say, and international assets are high.… Read more

There are two things I need to bring to your attention right now, especially if you’re an income investor. One is my outlook for the market, as volatility really hits home.

The other is a 15.6%-yielding(!) fund that just changed its name and ticker—and really grabbed contrarians’ attention in the process.

Let’s start with what’s really going on with this wild market.

The NASDAQ is now down more than 10% from its peak price, and stocks on the whole are down for the year. I don’t expect this to last very long. My take: 2025 is likely to be a year of volatility rather than a year of decline.… Read more

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