Author Archive: Michael Foster

What exactly are we to do in this levitating market? Buy more? Pull back? Do nothing?

I get why most folks are uneasy these days—they’re seeing the stock market, and particularly tech stocks, heading into the stratosphere, while the economy that supports them is a mess. Stocks can’t hang in midair forever, the thinking goes. Eventually they’ll plunge to earth.

A (Pleasant) Surprise in a Lousy Year

Don’t buy this argument. Because in the weird market we’re in, stocks can not only hover but actually rip higher and hand us growing dividends, too. Let me show you what I mean, starting with the economy.… Read more

There’s no doubt in my mind: five years from now we’ll look back at this time and say it was a golden opportunity to buy dividend stocks.

Those who bought in will be sitting on big gains (and income streams!). Those who sat on their hands will kick themselves.

I don’t want you to be in that latter group, which is why, in just a second, I’ll point you to a 6.9%-paying fund that’s perfectly positioned for serious gains in 2021 and beyond.

Dividends Back in Vogue

I know I don’t have to tell you that the dividend landscape has been bleak since March, with plenty of “sacred cow” dividend payers, like Disney (DIS) and Ford (F), dumping their payouts entirely.… Read more

Something shocking just happened: Treasury Secretary Steven Mnuchin cut off a $454-billion program the Federal Reserve uses to keep the bond market running.

A disaster, right?

You’d think so. After all, we’ve heard time and time again that the Fed will do whatever it takes to support the bond market through the crisis. Now a big source of cash needed to do that is gone.

The bond market’s response was even more surprising: crickets.

The junk bond–tracking SPDR Bloomberg Barclays High Yield Bond ETF (JNK) and iShares National Muni Bond ETF (MUB) held on to post-election gains after Mnuchin’s decision was announced.… Read more

Stocks are up—and so are coronavirus cases. And right on cue, I’m hearing from plenty of investors asking if now is the time to sell and lock in their gains.

No way. It’s actually a good time for us contrarians to buy. Here are five reasons why I see stocks rallying into the end of the year—and rolling higher still as we move into 2021.

Market Driver No. 1: Rising House Prices 

When house prices rise, homeowners feel wealthier. And when people feel wealthier, they tend to buy stocks.

It’s true that big-city properties are struggling to hold their own, but homes in the suburbs and rural areas are appreciating at a rate we haven’t seen in years.… Read more

There’s a dangerous dividend trap setting up out there. It’s easy to fall into, and if you make this mistake, you could do fatal damage to your nest egg—and income stream—in 2021.

It’s a classic error called “reaching for yield.” It happens when investors put too much weight on an investment’s current dividend yield without considering what’s behind that payout. More and more folks are making this blunder today.

I know what you’re thinking: “Michael, I can easily sidestep a mistake like that.” That’s easy to say, but it can be hard to resist when you’re confronted with, say, a 5% payout that seems safe at a time when income go-tos like Treasuries and stocks pay a meager 0.8% and 1.5%, respectively.… Read more

There’s a way for us dividend investors to tap the news of a COVID-19 vaccine for huge payouts of 10% and up. And we’ll position our portfolios for serious price upside, too.

I know the vaccine news has a bit of a “horse is out of the barn” feel to it. After all, the market and shares of the vaccine’s producer, Pfizer (PFE), have already popped (though the rally has taken a bit of a breather lately). But you’re not too late. With the three investments I’ll show you below, you could grab healthcare dividends much bigger than the 3.9% Pfizer pays now.… Read more

If there’s one thing you can be sure of in investing, it’s this: alarmists—whether they’re bulls or bears—almost never get it right. And playing the contrarian angle is a great way to grab big gains and 7%+ dividends.

Think back to the days before the election: brokerages were warning of unprecedented volatility following the big day. I heard from some investors who sold most of their holdings right before voters went to the polls, terrified that uncertainty over the results would cause a crash.

Then something weird happened. The election ended, the result was close—and stocks surged.

Close Race = Big Gains

Why did everyone get it wrong?… Read more

I sure hope you didn’t listen to the nervous Nellies who told you to pull your cash out of stocks ahead of the election. Since October 30, the S&P 500 has jumped more than 5%, as of this writing.

And remember tech stocks, the sector everyone seemed to be leaving for dead a few days ago? They’re up nearly 7%, going by the tech benchmark Invesco QQQ Trust (QQQ).

2020 Pulls a Fast One on Panic Sellers (Again!)

This is particularly painful if you’re a dividend investor. If you sold just a few days ago, you’re now forced to buy back in at higher prices—and lower yields!… Read more

Tech has taken a punch in the face this past few weeks—prompting many readers to wonder if it’s time to sell after booking some big gains in the sector this year.

No way. We’re dividend investors first and contrarians second, so we’re going to take the other side of that bet and buy this tech “mini-dip.” We’ll do it with closed-end funds (CEFs) yielding 7% (and more) that also give us a unique “double discount” to hedge any downside we might see in the coming months (this is 2020, after all) and a good shot at outperforming tech and the broader market, too.… Read more

They’re here again: more articles warning us of the “dangers” of municipal bonds. Don’t take the bait, because these wrongheaded articles will steer you away from some of the safest (and highest) dividends out there.

One claim you’ll read in many of these pieces is that states are losing tax revenue, which could mean they’re gong to default on their debt or go bankrupt. In reality, municipal-bond bankruptcies are really rare.

And I mean really rare: since 1970, the municipal-bond default rate has been 0.0043%, according to Moody’s Investor Services. To put that in perspective, the CDC says your chance of getting hit by lightning is 0.0002%.… Read more