Author Archive: Michael Foster

I really hope you’re not following the antiquated “4% rule”—which says you should withdraw 4% of your nest egg (and no more!)—in retirement. Because if you are, you’re staying in the workforce way longer than you need to.

In fact, you may already be financially independent and not even know it!

Today we’re going to look at why this theory could needlessly delay your retirement (in the words of the 4% rule’s author himself!).

I’ll also show you an easy way to grab almost twice as much from your retirement nest egg in every one of your golden years—I’m talking 7% easy here—and go one step further: live on dividends alone.… Read more

Four years ago, I published an article detailing how a young upper-middle-class professional could quit working and still survive on dividends alone in just five years. It was a claim that many folks thought was impossible to achieve (and they told me so in the comments!).

But history has proven that, in fact, it was true.

Today I want to show you how following the advice I gave back then would have produced financial independence (or an income stream that could cover basic needs) in just five years—and how you can replicate that same success today.

How It Works

Back then, I made three arguments:

1. A young professional earning $70,000 a year and, being very disciplined, managed to save about two-thirds of that income, could use the stock market to build a substantial nest egg in half a decade.

It’s the most common rule in investing: if you want to cut your risk (and protect your dividends!), you need to diversify.

Yes, we’ve all heard it before, but what most people don’t get is just how much you can damage your finances by not sticking with it—or, conversely, how much you can reap in gains (and safe dividends) by following a smart diversification strategy.

From $0 to $1 Million in Assets … and Back to $0

I’ve seen this play out firsthand; a friend was an early employee at a social media startup that got a big investment from a tech billionaire.… Read more

If you have $100,000 to invest, you can easily use it to unleash a dividend stream that pays you $940 a month. That’s $11,280 a year in dividends—on just $100K!

I know you’re probably thinking this sounds too good to be true (and you should be!), especially when 10-year Treasuries dribble out just 0.7%, and the typical S&P 500 stock isn’t much better, with a 1.7% yield.

You’re not retiring on either one of those meager payouts!

But $100,000 invested in a fund with an 11.3% dividend yield (like the one we’ll dive into below) gives you a good start toward clocking out, and on a modest nest egg, too.… Read more

These days, you can be forgiven for thinking a wave of bankruptcies is going to hit your portfolio (and your dividends!). But there’s no need to worry: this so-called “wave” is way overhyped—in fact, it could send your portfolio higher.

It’s just one more upside-down thing we investors have to deal with in this crisis.

And get this: you could line yourself up for triple-digit returns (and 8%+ dividends!) if you tap into investors’ (overwrought) bankruptcy fears through a corporate-bond-focused closed-end fund (CEF). I’ll have a ticker (paying a monthly dividend yielding 9.2%) in a moment.

First, let’s dispel one myth: that COVID-19 is behind all the bankruptcies we’re hearing about these days.… Read more

You may not know it, but big pension funds are pulling billions of dollars out of one sector, leaving behind a group of stocks these big players will never buy again.

That’s a clear signal that we need to avoid these stocks, too.

I’m talking about oil companies. In New Jersey, for example, legislators are trying to ban the state pension fund from fossil fuels. The state’s Fossil Fuel Divestment Bill has bipartisan support, mainly because oil has been a clear loser for investors. We can clearly see this when we look at the chart of the biggest oil major of them all:

Exxon’s Long Decline

Exxon-Mobil (XOM) peaked at a $500-billion market cap in 2007 and has been in a downward spiral since, pushed lower by the 2014 and 2020 drops in oil prices.… Read more

The market’s fall pullback is starting to reverse itself, but don’t worry: there are still bargain dividend payers yielding 7.4%+ dividends to be had out there.

But investing (along with everything in our lives!) has changed. You simply won’t get safe, high payouts by clutching to old habits and buying big-name, high-yielding S&P 500 stocks. The real dividend bargains are in closed-end funds (CEFs), which give you higher payouts, greater safety and often better returns over the long haul.

To show you what I mean, let’s line up three S&P 500 “dividend darlings” against the CEF competition and see how they compare.… Read more

There are four funds sitting right under investors’ noses throwing off rich 10.6% dividends today. What’s more, these high-yield closed-end funds (CEFs) deliver these rich payouts monthly.

We can thank the recent selloff for this opportunity. It’s weighed on these CEFs’ prices, tweaking their yields higher.

With a 10.6% payout, you can get a yearly dividend stream of $40,000 on just a $378,000 investment. If you went with an index fund like the SPDR S&P 500 ETF Trust (SPY) or Vanguard S&P 500 ETF (VOO), which both yield 1.7% as I write this, you’d have to invest $2.4 million to get the same payout!… Read more

There is a proven way to grab sturdy double-digit dividends in this income-starved market.

Today we’re going to follow it. The secret? Take a contrarian approach to a group of stocks most folks have (wrongly) soured on. Those stocks would be real estate investment trusts (REITs), which yield just over 4%, on average, putting the 1.7% paid by the typical S&P 500 stock to shame.

And if you make the simple move I’ll show you shortly, you could easily triple that 4% payout! You’ll give yourself a solid chance of beating the typical REIT investor’s returns, too.

I’ll give you names and tickers in a minute, but let’s talk first about an obvious trap most investors are falling into with REITs these days.… Read more

If we can be sure of one thing these days, it’s that millions of investors are fed up with the pathetic 0.7% yields offered by so-called “safe” plays like Treasuries. And the 1.7% dividend that the average S&P 500 stock pays? Nobody’s not retiring on that, either!

So it follows that many more investors will go on the hunt for high, safe dividends in the coming months.

That means a group of 500 big yielders called closed-end funds (CEFs) will draw a lot more interest. The average CEF yields 7.2% now, and the biggest payers yield well into the double digits, like the 14.6%+ yielders we’ll dive into below.… Read more