Author Archive: Michael Foster

Patriotism is rarely a good guide when making investment decisions, but these days it just might be, as Americans now have a terrific reason to buy US stocks.

That would be a surge in vaccinations that’s put the US ahead of most of the world on the road to recovery, while at the same time, US stocks are lagging behind their global competitors. This is a disconnect contrarians like us can use to position ourselves for some nice gains and big dividends in the months ahead.

US Vaccinations Ramping Up

Source: Bloomberg

Right now, we’re seeing an average of about 2.5 million doses being distributed across the US per day, meaning we could hit the bottom edge of herd immunity in about 50 days.… Read more

One of the great things about closed-end funds (CEFs) is that there’s one out there we can use to tap just about any trend—and turn it into a nice 7.1%+ dividend payout.

Take the surge in retail we saw last month. Despite the pandemic, Americans are hitting the stores again (with many doing so online):

Retail Sales Surge

In January, retail sales jumped 5.3%, far ahead of economists’ expectations of 1.2% gains. This was helped by a 0.7% sales drop in December, but it’s undoubtedly the result of the latest round of stimulus checks.

Retail ETF Soars, But Its Dividend Leaves Much to Be Desired

That’s great news for retailers because it proves that consumers are spending their COVID aid money instead of hoarding it.… Read more

You may not know it, but you could have enough money saved to retire right now.

It’s true!

Today we’re going to look at how you can pull a nice $30,000-a-year income stream from your current hoard, even if you’ve saved just $250K. Best of all, you could generate this cash stream without selling a single stock from your portfolio. That could very well be enough for you to clock out, or at least scale back your day job.

Along the way, I’ll also show you how to dodge some of the worst yield traps in dividend-land.

Be Wary of High-Yield Blue Chips

To be honest, I don’t know why anyone would be surprised that this approach is possible.… Read more

With the market scraping all-time highs—and dividend yields scraping historic lows—you’re probably thinking there’s nowhere you can find big, safe dividends with at least some price upside right now.

Well, you’re far from alone. The good news is, there’s still one place where the undervalued dividend payers you crave are common.

Today I’m going to show you exactly where to find these buys, in a sector rife with bargain-priced high dividends yielding all the way up to 12.5%. That’s more than 10X what the average S&P 500 stock pays.

Step 1 of Our Dividend Bargain Hunt: Step Back … Way Back

This gives us a nice opportunity to hone our value-seeking skills, too, by doing one of my favorite things—drilling down into the latest earnings numbers, which is something too few investors do.… Read more

A wild year like 2020 is a great acid test for closed-end funds (CEFs)—and it can tell us a lot about which of these high-yield plays to pick (and avoid!) as we move deeper into 2021.

A Split Market

If 2020 did anything, it widened the gap between winning and losing sectors of the stock (and closed-end fund) market. It just goes to show how critical it is to pick funds in the right sectors, as well as those with savvy management that can shift with the times.

Technology, of course, boomed last year. At my CEF Insider service, we were well-positioned in tech with the BlackRock Science and Technology Fund (BST), which we added to our portfolio in August 2019.… Read more

I don’t know about you, but I’m ready to say farewell to this whole Reddit/GameStop (GME) situation.

But before we bid adieu to this weird market moment, we need to take just one more run around the horn, because it’s left three big benefits in its wake that no one is talking about right now.

These three hidden catalysts all point to stronger market gains in the weeks and months ahead—gains we can “convert” to 7%+ dividends when we pick up one of my favorite investments, stock-focused closed-end funds (CEFs), right now. Let’s dive in.

Reddit Gamblers’ Wins Will Go Into the Economy (and Boost Other Stocks)

The most immediate positive for the market comes from the big gains early investors in GameStop and other companies at the center of this battle enjoyed.… Read more

With stocks crowding all-time highs, we need to follow our contrarian instincts now more than ever.

That, of course, means going where everyone else isn’t.

And the best contrarian investment I can think of right now is municipal bonds, or bonds issued by state and local governments to pay for vital infrastructure.

Don’t click away! Because these “sleepy” bonds boast dividends so high that, simply by buying them, you could match, or even beat the stock market’s long-term historical return (around the 7% to 8% range) in dividends alone.

Better still, “munis” boast the highest stability on the market, so we’ll be “backstopped” by rock-steady prices while we collect our outsized dividends.… Read more

Over the last few days, my inbox has been filling up with questions from readers about how this GameStop (GME) drama will affect their dividends, their pensions and even their retirement.

Let me say off the top that if you’re invested in top-quality stocks and funds for the long haul, you have nothing to worry about. In fact, this entertaining episode in financial history has created a nice opportunity for us to add to our positions in high-yielding closed-end funds (CEFs).

We’ll dive into that in today’s column, along with the most common questions I’m getting about this unique time in financial history.… Read more

One of the biggest risks you’ll face as an investor is the temptation to listen to people at the extremes.

In income investing, these so-called “gurus” break down into two camps. The first are the indexers, who argue that all you need to do is buy a fund like the Vanguard S&P 500 ETF (VOO), which, as the name suggests, simply tracks the S&P 500. Sure, the yield is a crummy 1.5%, but you need to stick with it, work for 40 years, save as much as you can, and live off the low payout.

Unfortunately, if you follow this “advice,” you’ll have to save north of $4 million if you want a $50,000 dividend stream to live on without selling down your holdings.… Read more

Many people are desperate for any decent yield these days, which is making oil and gas funds (with payouts that can stretch into the double digits) look attractive.

But the trouble with buying these funds now is that you’re putting yourself at risk of price drops far bigger than any yield you might collect. That’s a worst-case scenario for anyone in retirement or hoping to clock out in the next few years.

Another thing to consider is that the argument for investing in energy funds is based on the recent improvement in oil prices, which appears to be accelerating.

Recent Oil-Price Moves Mislead …

I’ve seen a few pundits point to a “boom” in oil prices, selectively choosing time periods like the one above, to argue in favor of jumping into energy stocks and funds.… Read more