Author Archive: Michael Foster

Don’t listen to the index-fund crowd: it is possible to beat the market year in and year out—and you can do it while grabbing big 7%+ dividends, too!

There are three steps to pulling off this feat:

1. Go with a high-yield closed-end fund (CEF): many of these funds return more than their benchmarks on the regular! AND because they pay 7% dividends, on average, you get a large portion of your gain in cash!
2. Look beyond stocks: Other markets, like corporate bonds and municipal bonds, are far less “democratic” than the stock market: in other words, the big players get the pick of the crop!

Another year, another COVID relief package—$1.9 trillion worth this time. As the old saying goes, “A trillion here, a trillion there, and soon you’re starting to talk about real money!”

But what does this latest cash injection into the economy mean for our closed-end fund (CEF) returns in 2021? Let’s take a look, starting with the big-picture view.

The Extra Debt Is Manageable

The No.1 worry with all of this is that, with all the borrowing the government has done (a total of $6 trillion has been spent on stimulus so far), we’re going to be left with a crippling debt crisis.… Read more

Now that the Democrats control the House, Senate and the White House, you’re probably wondering what the new administration means for your tax bill—and your portfolio.

There’s good news here, and it comes in two parts: first, the tax hit likely won’t be as much as you think (if you notice it at all!). And second, Biden’s tax plan has quietly boosted the municipal-bond market, where there are scores of tax-free dividends waiting for us. And it’ll likely boost it even more in the months ahead.

First Up, Your Tax Bill

The takeaway is that, while there are some changes in the tax code in Biden’s latest plan, taxes will remain lower than they were when President Trump first took office.… Read more

If you’re like most investors, you’re tired of having the following two pieces of “wisdom” pounded into your head by the financial media:

1. Any high yield (here I’m talking 6% and up) is dangerous and certain to be cut, and …
2. Hardly anyone ever outperforms the S&P 500, so why even try?

Both are nonsense.

Fact is, you can get steady yields of 7% and higher (or even 8.8%, as I’ll show you shortly) through several high-yield funds called closed-end funds (CEFs). (If you’re a member of my CEF Insider service, you already know this: our portfolio of 20 CEFs is handing us an average dividend of 7.7% today, with the highest yielder of the bunch paying an outsized 11%.)… Read more

With China handily beating the coronavirus while pretty well every other country struggles to contain it, you might be considering buying Chinese stocks now.

It seems like a no brainer, right?

Unfortunately, such a move would be a mistake—especially if you’re lured by the siren song of the closed-end fund (CEF) I’ll name below. Because there’s a gathering storm that’s threatening the country’s stock market and economy, and few people are talking about it.

Funny thing is, despite all the so-called advantages China’s companies are supposed to have: lower operating costs and lower regulations among them, these stocks have never really delivered.… Read more

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