Author Archive: Michael Foster

When you think about the biggest returns you could get on the market today, what do you think of? Tech? Biopharma? Gold stocks?

What about utilities?

This “boring” sector is known for high-yield stocks with little volatility. The (usual) downside to that income is lackluster capital gains, with many utilities staying range bound for years.

Except when they don’t.

Today we’re going to look at two utility funds that, over time, have crushed the S&P 500: the Cohen & Steers Infrastructure Fund (UTF) and the Reaves Utility Income Fund (UTG). Over their near 20-year histories, these funds have returned an annualized 11% per year.… Read more

Far too many investors ignore dividends, especially in a bull market. It’s easy to see why: with stocks racking up yearly double-digit gains, it’s tough to get worked up about a sub-2% payout (which is what most S&P 500 names pay).

But a crisis flips the script, making safe cash dividends a lot more attractive. And luckily for us, there’s one ignored corner of the market where we can grab payouts that triple what the typical stock dribbles out.

That would be in municipal bonds, or “munis,” for short. They’re a kind of debt instrument issued by local governments throughout the US.… Read more

When it comes to protecting—and growing—your dividends (and portfolio) in these trying times, there are two sectors you should watch like a hawk: technology and energy.

Both are standouts in this crisis, but in completely different ways. Energy, for example, is a big reason why the second-quarter earnings outlook for the S&P 500 looks so grim:

Take a look at the chart below and you’ll see that energy is by far the biggest loser. Along with a few other industries, it offsets other areas where profits are forecast, such as tech, utilities and healthcare—all three of which are also great spots to shop for big dividends now.… Read more

Right now, thousands of Americans are making a mistake that threatens to lock in the losses they’ve suffered in this downturn.

Worse, these folks will be stuck on the sidelines in the rebound, watching helplessly as other stocks soar and their holdings stagnate, or even drop further.

I’m talking about people who hold master limited partnerships (MLPs) and buy into the myth that these companies—owners of oil and gas pipelines and storage facilities—are simply “toll bridges,” making them a relatively safe play on energy.

Worse, many of these folks think MLPs can benefit from the huge glut of oil and gas building up around the globe.… Read more

Has the market bottomed, or are we headed for another leg down before we can start to even think about any upside? It’s a debate that will be with us for a while yet.

But maybe not in every corner of the market. Because there’s a funny thing happening with closed-end funds (CEFs): for some of these high-yield investments, the recovery has already come.

Let me explain.

In a selloff, a CEF can get hit in a couple ways, namely from the market and from investors. In the case of regular stocks, these are the same. But for CEFs, there’s a key difference: while CEFs trade on the open market, like stocks, they have a fixed number of shares (hence the name“closed-end funds”).… Read more

These days, we’re hearing a lot of pundits pontificating about which way the markets will go. But let me suggest something none of them are talking about:

What if stocks trade more or less flat for the next while?

It’s a contrarian call, to be sure, but there’s reason to think markets may be, well, kind of quiet in the coming days or weeks. And there’s a way we can squeeze a big 9.2% income stream out of just that kind of market.

The Flat-Market Theory

I know what you’re thinking: how on earth could stocks just hold their breath while America is on lockdown, possibly for a long time to come?… Read more

There’s no doubt portfolios everywhere are whipsawing due to the selloff.

But I’ve got good news for you: going by the historical record, this pullback will likely be shorter than most people think, and if you buy now—particularly if you target a select group of high-yield stocks and closed-end funds (CEFs)—you’ll outperform your fearful friends when the bounce-back comes.

Meantime, you’ll open up a nice new income stream to meet your cash-flow needs today. It literally is the best of both worlds!

Let’s dive into what the facts say about this bear market’s duration. Then I’ll name two funds worthy of your attention now.… Read more

There’s one investment you simply must not hold in this market crash—a highly speculative, high-yielding instrument called an exchange traded note (ETN).

Does the name sound familiar? That’s probably because it sounds like “exchange-traded fund,” or ETF. But an ETN isn’t like an ETF at all—and that’s a distinction many people fail to make.

So what’s an ETN, then?

It’s a highly leveraged, speculative instrument that lets investors access particular asset classes. In good times, ETNs can skyrocket. These, however are, er, more interesting times.

ETNs: Guaranteed Losses in the Coronavirus Crisis

As a result of the coronavirus selloff, ETNs aren’t just going to rack up big losses—they’re going to go to zero.… Read more

Markets have freaked out over the coronavirus—but there’s good reason to believe they have overreacted—I gave you a few of these reasons in my March 19 article.

There’s another reason we need to talk about today: corporate earnings.

While it’s true that earnings expectations have fallen since the outbreak began, they haven’t fallen as much as you’d think. At the start of the quarter, analysts expected 4.4% earnings growth from S&P 500 companies. Now they’re expecting a 0.1% earnings decline.

That’s basically flat, and it’s better than the earnings declines we saw at the start of 2019, when stocks were rallying, so this news shouldn’t scare investors away.… Read more

To be sure, no one expected stocks to notch big double-digit losses in just two weeks, and while I don’t know when a rebound will happen (anyone who claims they do is lying), the economic numbers do carry a ray of light.

So let’s dive into them, and talk a little bit about the 18 funds in our CEF Insider portfolio, too.

Of Lizards and Dividends

First, there’s one thing we must not do at a time like this: follow our “lizard brain”: the primeval part of our thought process that tells us to flee when danger rears up, to keep our precious capital safe.… Read more