Author Archive: Michael Foster

There’s a new closed-end fund (CEF) on the market, and it comes from one of the biggest CEF issuers in the space: BlackRock.

It’s big—with $4.5 billion in assets under management. You can tell that straight from the ticker symbol: BIGZ. The fund’s full name: the BlackRock Innovation and Growth Trust (BIGZ).

So we know it’s got heft—and it’s got BlackRock’s deep bench of talent behind it (remember that BlackRock is the world’s biggest investment firm, with $7 trillion under management). But does BIGZ have a place in your portfolio? That’s the question we’re going to tackle today.

BIGZ got its start in March, and it’s currently trading flat from its inception and trailing the tech-heavy NASDAQ, which is the best benchmark for the tech-heavy BIGZ.… Read more

Manufacturing is as cyclical a business as there is, and it’s about to take off, driven by two vastly misunderstood factors:

1. An uptick in inflation, and
2. A big jump in stimulus spending

What most people don’t get is that these two trends are inextricably linked. And sitting right where they meet is a closed-end fund (CEF) trading for 88 cents on the dollar and just waiting to pay us a fat 5.3% dividend.

Let’s start by taking these trends one at a time.

Inflation: Likely Not as Hot as Most People Think

Let me start by saying that the breathless media coverage of inflation is focused entirely on how it will crimp stock market returns.… Read more

Plenty of people blindly buy into the line that market volatility is a bad thing.

It’s easy to see why, after last year’s crash dented retirement savings around the world. Contrarians like us, of course, fight against the emotional pull to retreat when volatility stirs—and buy into a pullback instead.

The last year’s market run is proof this approach works. And it’s nothing new: we’re simply following the old Warren Buffett adage and buying when others are fearful. But it’s what we plan to buy now that separates us from the crowd, as I’ll show you in a moment.

It’s Not You—the Market Is More Skittish Than Before

One thing we can be clear on is that, yes, the market is more volatile these days.… Read more

Let’s be honest: there are a ton of ways to collect passive income out there. But there’s only one that’s easy to get into (no matter how much money you have!), generates yearly cash payouts of 8% or more and is used by billionaire investment gurus on the regular.

I’m talking about an often-overlooked investment called a closed end fund (CEF). And today I want to show you how to invest in CEFs in just three simple steps.

CEFs are like mutual funds or ETFs in that they pool together money from investors, which the fund’s managers then use to buy a basket of stocks, bonds, real estate investment trusts (REITs) or other investments, depending on the CEF’s mandate.… Read more

Inflation worries are everywhere, so let’s dive into what’s behind them—and what we contrarian income-seekers should do right now. The three steps I’m about to show you could hand you a lot of fresh dividend income and price upside, too—even in this (still) overstretched market.

First up—is inflation a real fear right now? Let’s look at the numbers.

Inflation Rises Sharply …

That chart—and shortages of everything from microchips to ketchup—sure seem to indicate that a continued rise in prices is on the way.

But there’s a caveat: this chart compares today’s inflation rate to that of the crushed economy of last year, not to mention those supply-chain issues, which are likely to get ironed out as more of the economy reopens.… Read more

We need to talk about SPACs, the popular kids of the investment world over the last year, because they could play a bigger role in our portfolios—and even our dividend income—in the future.

Few people associate SPACs (or special purpose acquisition companies) with dividends. That’s because these so-called “blank check” firms are all about growth: they’re set up and pushed through an IPO simply as a pile of money that’s been pooled by investors. Then, post-IPO, their managers purchase an existing private company (with many SPACs focusing on the tech space). By doing so, the newly acquired firm immediately becomes public, since the SPAC is already a public entity.… Read more

Don’t listen to the naysayers—tech stocks are set to thrive in the coming months, and the sector is still a great place for us to go hunting for big, and growing, dividends.

Here’s one reason why: despite worries about rising interest rates, the Federal Reserve is likely to keep its key lending rate near zero. That, in turn, means businesses, and especially innovative tech players, will continue to have access to cheap money to invest in new products. 

This low-rate world also means investors starved for income will crowd into any higher-paying investments they can spot (including high-paying tech funds like the one we’ll discuss below).… Read more

Three of the most successful closed-end funds (CEFs) in history have done something unprecedented—both for the funds themselves and the company that manages them. They merged.

PIMCO is arguably the most successful CEF manager around, and investors know it: they’ve bid up almost all the company’s funds to premiums to net asset value, or NAV (in other words, their market prices are higher than the per-share value of their portfolios). 

The company has always kept its funds separate, even though they have many similarities, so it came as a surprise when it announced that its PIMCO Dynamic Credit and Mortgage Fund (PCI), PIMCO Dynamic Income Fund (PDI) and PIMCO Income Opportunities Fund (PKO) would be merged into the same fund.… Read more

There’s a “retirement shortcut” far too many people ignore—and it could let you hang ’em up a lot sooner than you think (and with a lot more income, too).

Retirement Investing: Most People Go Wrong at Step 1

When it comes to retirement investing, most folks lean heavily on dividend-paying S&P 500 stocks, particularly those with above-average dividend yields. And if you don’t want to manage a blue-chip stock portfolio on your own, no problem: Wall Street has you covered with the many ETFs it offers.

But this is the wrong route for a number of reasons—the main one being lame dividends!… Read more

Infrastructure spending is back in vogue, and we’ve got a chance to grab a piece of it tax-free.

That would be through municipal bonds, investments most people see as sleepy (though I have no idea why) but are poised to roll as President Biden’s $2-trillion infrastructure package (or some version of it) becomes law. That’s because the law will usher in an explosion of new “muni” bonds—and there are select actively managed closed-end funds (CEFs) ready to pick up the best ones.

By buying them now, we can nicely front run this muni-bond wave.

Tax Savings Can Boost Your Payout 20% (or More)

The best part of buying muni bonds (which are issued by states, cities and some non-profit entities, like hospitals, to fund infrastructure) is that the income they generate is 100% tax-free.… Read more