Author Archive: Michael Foster

We’ve got a pullback-driven (and tax-free!) dividend opportunity waiting for us now, and we can thank the Fed’s looming rate hikes for it. It’s a “safety first” closed-end fund (CEF) paying a 4.5% tax-free dividend and trading at a rare 8.4% discount to its “true” value.

This opportunity comes our way through municipal bonds, or “munis.” If you follow the market for these bonds, which are issued by state and local governments to fund infrastructure projects, you know that they’ve pulled back this year:

Munis Slip, Giving Us an “In”

A 2.9% drop, as we see here in the iShares National Muni Bond ETF (MUB), the benchmark ETF for the space, is small compared to the much bigger declines in stocks, but this is pretty rare: as an asset class, muni bonds are less volatile than other kinds of bonds, let alone stocks, which is why any short-term drop tends to be a buying opportunity.… Read more

One of the best things about closed-end funds (CEFs) is that, even though there are only about 500 or so of these 7%+ yielders out there, you can find CEFs that win in every kind of market.

So with a few clicks, you can build a diverse CEF portfolio yielding well north of 7%. (The 20 holdings in our CEF Insider service’s portfolio, for example, yield 7.7% on average and hold everything from tech stocks to municipal bonds and real estate investment trusts, or REITs.)

Below I’ve got an 8% monthly dividend payer that’s primed for “snap-back” upside as one group of stocks—those that sell discretionary products, from electronics to clothing—spring back to life.… Read more

We’re seeing signs every day that this pouting market is way oversold—and contrarians that we are, we’re going to work this sentiment to grab stout closed-end funds (CEF) paying dividends yielding north of 7% that have been unfairly beaten down.

Here’s my take on how far off-base today’s investor mood is. In a moment, we’ll dive into 2 CEFs yielding up to 8.5% we can buy to cash in.

1. Inflation is not hurting corporate profits. If anything, profits are going up across the board. Many companies have seen their profits—and profit margins—rise in the earnings season that’s currently underway.
2. Supply chains have challenged businesses, but they haven’t caused the economy to grind to a halt.

As dividend investors—and closed-end fund (CEF) investors, specifically—we know to stay the course when market corrections hit: we don’t want to sell and cut off our precious payouts!

That’s the opposite of the fanboys and girls who dabble in crypto, profitless tech stocks, NFTs and God knows what else. When recessions arrive, they’re free to bail—though they always do so way too late. Then they’re forced to sit and watch what’s left of their cash get devoured by inflation!

By staying the course, we don’t have to worry about those risks: with our CEFs’ high yields, we can sit tight during rocky times, happily collecting our payouts until things calm down.… Read more

There’s a group of 7%+ dividends out there that are perfect for today’s market. They’re far less volatile than “regular” stocks, their payouts are tax-free, and (for now) you can get them for a steal—as cheap as 93 cents on the dollar!

That puts them high on the list of “refuges” from the speculative stocks the mainstream crowd is fleeing these days—and we want to make sure we get in first! (And we’ll do that with two muni-bond funds we’ll name below. Their tax-free yields could be worth up to 8.9% to you, depending on your tax bracket.)

I’m talking about municipal bonds—specifically municipal bonds we can buy through my favorite high-yield investment: closed-end funds (CEFs).… Read more

When it comes to dividend cuts, closed-end funds (CEFs) aren’t much different from stocks: investors tend to hit the sell button as soon as a cut is announced, leaving those who hang on with a shriveled income stream and a hit to the value of their investment.

In fact, sometimes a selloff in response to a dividend cut can be worse with CEFs because investors mainly look to them for income, with the average CEF yielding 7.5% today.

This is obviously a situation we want to avoid, which is why I’m writing you now: we’re going to look at two recent CEF dividend cuts to see what they can tell us about dodging said cuts.… Read more

This stock market selloff has gone way too far—and it’s pumped up the dividend yields on some of our favorite high-yield closed-end funds (CEFs).

That means it’s time to buy. I’ll name three CEFs the panicked masses have mistakenly tossed over the side in a moment. Together, these three snubbed funds throw off an 8.7% average dividend. Plus they’re trading at a nice “double discount”: that is, the CEFs themselves are cheap and their holdings, which consist of top US and international stocks, are way oversold in this latest market fracas, too.

History Is on Our Side

When considering opportunities like this one, it pays to look at history.… Read more

Investors are way too pessimistic about the economy. And their gloom—driven by the mainstream press (as usual)—is setting us up for a rare “double discount” on closed-end funds (CEFs) throwing off 7%+ yields.

I say “double discount” because almost everyone is misreading some of the latest economic signals—and it’s causing them to sell stocks (and CEFs!) at exactly the wrong time.

That mistake—which is behind a large part of the drop we’ve seen in the markets since the start of the year—is discount No. 1.

And we’ll get discount No. 2 by shopping for CEFs that are also trading at undeserved discounts.… Read more

Today we’re going to make a couple crafty moves worthy of the canniest contrarian—and in doing so, we’ll grab reliable income plays other investors are snubbing (with outsized yields up to 8.6%).

These moves fly right in the face of the Federal Reserve’s planned rate hikes, potentially starting as early as March, but that’s the whole point: plenty of folks have let the fear of higher rates scare them off these investments. But as mainstream investors almost always do, they’ve taken things too far, nicely setting us up to grab these high yields and some price upside as 2022 unfolds.

Let’s start with our first move, which is into longer-duration bonds, and specifically closed-end funds (CEFs) that hold them.… Read more

These days, everyone’s in a tizzy about rising interest rates. But what if I told you that this panic is overblown—and it’s setting us up for some very nice windows to buy some top-quality high-yield funds throwing off payouts of 7% and up?

Why do I think it’s overblown? We’ll get into that below. But before we do, we should be careful to acknowledge that the early-2022 “crash” pundits are bleating about isn’t much of a crash at all:

You Call This a Crash?

The S&P 500 is down less than 2%, and while that isn’t great, it isn’t terrifying, either, especially when we zoom out just three months.… Read more