Author Archive: Michael Foster

With the press bleating about the yield curve inverting (again!) and scaring everyone with recession talk, we dividend (and particularly closed-end fund!) investors need to talk strategy.

I’ll drop a ticker that’s perfectly suited for these weird times in a second. First, let’s dive into what the inverted yield curve is—because it actually sets up a nice buying opportunity for us.

The “yield” in “yield curve” refers to the yields on the 10-year and 2-year Treasury notes. In normal times, the 10-year yields more than the 2-year, but in recent days, that gap has shrunk to nearly nothing:

2-Year Yield Reels in the 10-Year: Recession Ahead?… Read more

If you’re like most investors I hear from these days, you’re suffering from a serious case of market vertigo.

On the one hand, stocks have posted strong gains over the last couple of years: with an annualized average return of over 19% since the start of 2020, the main US indices are up over double their long-term average of 7.5%.

Stocks Soar—Even With the Early 2022 Dive

But of course, the last two months have been stomach-churning, and more pullbacks are likely: the Fed has made no bones about the fact that it plans to raise rates quickly. And while the US economy recently cracked $24 trillion in annual GDP, an impressive 10.5% jump from before the pandemic, that’s still short of the 19% rise in stocks in that time.… Read more

When I talk to investors these days, I hear three main reasons why they’re feeling unsettled. All three fears are interconnected (and none of them will likely surprise you!): inflation, the Federal Reserve and the war in Ukraine.

But the funny thing is, these factors are all actually enhancing the appeal of US stocks right now, particularly if we buy them through our favorite income investments: high-yielding (and often monthly paying) closed-end funds (CEFs).

Let’s take a closer look at each of these fears now, then talk about a CEF that’s well suited to the unsettled investor mood these days. It yields 7%, trades at a particularly attractive 6% discount to net asset value (NAV) and boasts a unique strategy that tones down its volatility and strengthens its dividend, too.… Read more

A contrarian indicator just flashed, and it’s telling us that now is the time to buy one of my favorite high-yield investments: closed-end funds (CEFs). Today we’re going to look at three yielding an outsized 11.6%.

Yield hunters that we are, we know the power of such a payout: with a $520,000 investment, we can kickstart a $60,000-a-year income stream. That’s a cool $5,000 averaged out on a monthly basis. And the three funds we’re going to cover in a moment give us the safety of diversification, going well beyond stocks to give us access to bonds, gold (a decent inflation hedge on its own) and real estate (ditto!).… Read more

We need to talk about a mistake almost every investor makes—and it’s a particularly easy trap to fall into today.

That would be letting the headlines push us to make investing decisions out of fear. Below, we’re going to dive into a scenario where doing so could have resulted in 30% in losses and missed profits in the last 12 months. And that’s before we even consider the dividends that would have been left on the table.

How Letting Inflation Fears Rattle You Could Cost You Big

Let’s consider today’s inflation scare, which feels new, but in fact was just starting to make the news a year ago.… Read more

It probably won’t surprise you to hear that I’m hearing from a lot of investors who are concerned about protecting their portfolios, and their income streams, from the worrying times we’re facing today.

As the strategist of the CEF Insider high-yield investing service, I hear those worries, and I take them to heart with every CEF pick I make. And while talking portfolio strategy may seem a little inconsequential given the tragic events unfolding in the Ukraine, it’s vital that we do everything we can to look out for our families’ needs, especially now.

What’s more, by protecting and growing our income streams, as my colleague Brett Owens recently said, we can use our dividend dollars to help address some of today’s dire needs, whether it’s by donating to a charity helping the people of Ukraine or in the USA, by supporting family businesses that have been hit by the pandemic and, now, soaring prices.… Read more

Ignore the overtorqued headlines about inflation: even though prices are rising, they won’t take out the economy.

In fact, rising inflation is setting us up with a contrarian opportunity to grab double-digit dividends in a corner of the market everyone’s written off. That would be consumer-discretionary stocks, which you’d think would be the main victims of inflation, but that’s far from the case, for reasons we’ll get into shortly.

We’ll also delve into one smartly run consumer-focused closed-end fund (CEF) yielding an outsized 11% below. But first we have to talk strategy, because while there are opportunities for us, this twitchy market also includes some traps we need to watch for.… Read more

This market’s insistence on falling—even though earnings are soaring—has opened up a strong buying opportunity for us dividend investors.

And we’re going to tap it to grab a rare “double discount” on an 8%-yielding closed-end fund (CEF) that no one’s noticed. This income-and-growth machine has soared 260% since inception and has the potential to crush stocks this year, thanks to its undeserved markdown.

More on that below. First, let’s talk about this stock-market disconnect, because recent declines have yanked the S&P 500’s price-to-earnings ratio down to 23.8. That may not sound cheap, but it’s far below last year at this time, when valuations hit a nosebleed 43.7.… Read more

These are trying times, so let’s talk about how we’re going to protect our retirement (and our families’ futures) as market volatility increases.

The Ukraine crisis is, of course, first and foremost a humanitarian tragedy the world is racing to respond to, as it should. It’s also being felt well beyond the borders of Russia and Ukraine, with rising energy prices fueling inflation fears, which are, in turn, causing panic in global markets.

High, Monthly CEF Dividends Help Stabilize Our Portfolios

At times like these, closed-end funds (CEFs) are a good investment choice because their high dividends help us meet our income needs while volatility increases: as I write this, our CEF Insider portfolio is delivering an 8% yield, on average, and we’re getting a predictable income stream, too, with 16 of our 21 holdings paying us monthly.… Read more

With the swift stock-market decline we’ve seen since the start of 2022, and now, you can be forgiven if your stomach tightens just a bit when you go to check your retirement account.

So today I’m going to give you my three best tips for securing your hard-earned cash—and even better, locking in a dividend stream you can easily live off of in retirement. And no, you won’t need a seven-figure nest egg to pull off what I’m going to show you now.

Step #1: Diversify the Right Way

You no doubt know that diversification is key to protecting your wealth, but if you only go halfway, you’re hurting your gain potential (and exposing yourself to potentially severe losses).… Read more