Author Archive: Michael Foster

Let’s look at how we closed-end fund (CEF) investors can grab a healthy 6%+ dividend in this zero-rate world and dodge every retiree’s nightmare: that would be having your nest egg run out with years of retirement still to go!

We can pull this off in part because the dividend story is not as grim as most people think. In fact, S&P 500 dividend payments actually hit a new all-time record in 2020!

That’s right: in a year when many long-time dividend payers cut or suspended payouts, the market handed over the highest amount of dividends ever.

Popular Stocks’ Dividends Plunge, Then Rebound …

If you held an ETF that tracks the S&P 500 index, like the SPDR S&P 500 ETF Trust (SPY) or the Vanguard S&P 500 ETF (VOO), you might find this hard to believe, especially when the current yields on the typical S&P 500 stock dropped to its lowest point in a generation.… Read more

The disaster that was 2020 is finally out of our hair, though there could be one silver lining if you followed a contrarian investing approach in 2020: serious gains in your stock portfolio.

But, of course, those gains come with a big consequence: Uncle Sam will be coming for his share on Tax Day in April. And to be honest, we don’t have much leeway to cut our 2020 tax bill at this point. But there is one canny move we can make to (legally, of course!) reduce our tax burden in April of next year: buy municipal bonds.

What Everyone Gets Wrong About Municipal Bonds

Sure, municipal bonds (issued by cities and states to fund local infrastructure) seem like a pretty boring option when there are corners of the stock market (I’m looking at you, tech) that jumped 40%+ last year.… Read more

Let’s relegate 2020 to the trash heap (where it belongs!) and look to the new year that dawns tomorrow. I’ve got three predictions I’m going to lay out for you now, and three high-yield closed-end funds (CEFs) with dividends up to 8% that are nicely positioned to ride them to strong gains in the next 12 months and beyond.

Prediction No. 1: Home Sales Will Surge—and So Will This 8% Payer

One of the biggest financial stories of 2020 was the strong real estate market. In November, US home prices jumped 12.7%, and Zillow believes 2021 will be “the hottest [year] in recent memory.”… Read more

As contrarians, we know we need to buy when everyone’s selling. Because that’s when we get gains like this:

Buying Into the March Crash Was Hard—But It Paid Off

Of course, anyone who sold their stocks in the depths of the March crash learned just how damaging that can be. But if you played the contrarian and bought in March, you did great.

But where should contrarians be shopping today, with US stocks, especially tech stocks, at all-time highs? We’re going to explore beyond big tech and focus on a contrarian hunting ground few investors consider: emerging markets.

One reason why developing economies don’t make it onto most investors’ radar is that they’ve been underperforming: in the last three years, their returns have been a fifth of those of US tech stocks, even as these markets have seen strong growth and technological improvements (especially in less-developed Asian nations).… Read more

Let’s take a look at how the new stimulus bill affects our portfolios—and dividends!—then look at how we’ll invest in closed-end funds (CEFs) for 7%+ dividends as 2021 unfolds.

Cash to Consumers = Bigger Corporate Profits (and Dividends)

One thing’s for sure—unlike the spring package, this one eliminates the problem of big companies absorbing billions in aid. This package is focused on putting cash in consumers’ hands, which I think we can all agree will do a better job of stimulating the economy.

For starters, taxpayers will get $600 in checks sent to them, while people on unemployment will get an extra $300 per week.… Read more

There’s a grinding pandemic and stocks are still up 15%! It’s tough to believe, given the year we’ve all lived through, but here we are.

So what the heck do we do now? Is there more upside ahead or is another big plunge around the corner?

You’re not the only one asking this question—everyone is. And the media and Wall Street, as always, feel they have the answer. A quick glance at the CNN Fear and Greed Index shows that we’re at the top end of “greed”—not exactly in “extreme greed” territory but getting there.

Source: CNN Business

Usually, when the market has gotten too greedy, it’s time to get fearful.… Read more

I’ve been hearing from a lot of readers who are sitting on some nice gains this year—and now they’re wondering if it’s time to sell.

Should you?

As with so many other things in 2020, it depends. What are you planning on selling? With many closed-end funds (CEFs), this is the time to buy more, as they haven’t fully priced in the vaccine- and stimulus-fueled recovery we’re likely to see in 2021. But with some CEFs, there are plenty of reasons to consider taking some money off the table.

Today we’re going to zero in on three such funds. They boast attractive portfolio holdings and high dividend yields—more than 8% in one case.… Read more

Markets are betting on the federal government pumping $908 billion in stimulus into the economy. If that cash wave rolls out, it’ll boost the group of funds I want to talk to you about today. They pay dividends of 6%+ and trade at big discounts to their true value now.

The Current Stimulus State of Play

First up, while the final stimulus bill is still being negotiated by Congress, it seems likely we’ll get a version similar to what’s been released already when a compromise is reached. So let’s take a look at what’s on offer.

Before we go further, I’ll say that the government’s new stimulus bill looks more effective than the CARES Act passed in the spring.… Read more

With 2020 coming to a (merciful) close, it’s a good time to take a moment to cast an eye over our dividend portfolios.

One thing to pay particular attention to: the amount of cash you’re holding. Because if you’re like many investors I’ve talked to recently, you’re holding too much of it—and that can cause a steady wealth drain that bleeds away thousands in returns every year!

Taking Money Off the Table—at Exactly the Wrong Time

Of course, having a healthy cash cushion is always a good thing. The trouble for most folks, though, is that they’ve been growing the amount of cash they have outside the market just as stocks have taken off.… Read more

If you’re like most people these days, you’re desperately searching for any kind of meaningful dividend stream.

Finding one is no easy task. The S&P 500, after all, yields 1.5%, on average. Treasuries? With their 0.9% yields, they’re not even worth talking about.

With the old income go-tos off the table, plenty of folks are looking further afield. Some are boosting their holdings of high-yield bonds through exchange-traded funds like the SPDR Bloomberg Barclays High Yield Bond ETF (JNK). Others are going with more esoteric investments, like high-yielding business development companies (BDCs), which you can tap through the UBS Etracs Business Development Company ETN (BDCS).… Read more