Author Archive: Michael Foster

Not many people realize it, but there’s a way you can actually get paid to own stocks.

I’m not talking pennies, either. The fund I’m about to show you is capable of generating $64,000 in dividends per year on a $500,000 investment, thanks to its 12.8% yield, as of this writing.

This gives us three things:

1. A large, reliable income stream with a lower risk of principal loss (unlike many annuity products and other income funds out there, where loss of principal is guaranteed).
2. Diversification across over a hundred companies in one of the most oversold sectors today: technology—including firms driving the AI revolution, like Nvidia (NVDA).

Imagine a fund yielding 16.2% that’s likely to keep that high payout steady for years and years. I know it sounds unthinkable, yet we have just such a fund sitting in front of us today—ripe for buying at a discount, no less.

That would be the PIMCO Dynamic Income Fund (PDI), a bond fund throwing off that 16.2% payout, as of this writing. PDI uses a variety of credit investments to produce that outsized income stream. Thanks to high interest rates that look set to stay high for some time, and thanks to a sudden drop in the fund’s valuation, that income stream is sustainable.… Read more

I hate to see investors get snared by so-called “rules of thumb” like the 4% rule (which we’ve debunked here on Contrarian Outlook many times before).

The trouble is, these rules only “work” until they don’t. And blindly following them through an unexpected market turn could lead you to investment losses, or to run out of money in retirement.

Heck, some don’t even have a germ of truth to them, like the “100 minus your age” rule, which says you should subtract your age from 100, and that’s how much of your portfolio you should dedicate to stocks. So if you’re 30 years old, 70% should go into stocks and 30% into bonds.… Read more

It was the best of times, it was the worst of times. No, I’m not talking about Dickensian London—I’m talking about the mood among investors in our favorite high-yield investments, closed-end funds (CEFs), these days.

Those of us who know what to look for in CEFs are finding a rich hunting ground of big dividends. Yields are up—our CEF Insider portfolio yields an average of 10.2% today—and we’re in a good position to book longer-term profits due to the big discounts still available. (We can thank the cautious folks who invest in CEFs for that—they’ve been slower to buy back in after the 2022 pullback, due to alarmist media headlines.)… Read more

The hardest part of convincing folks they can lock in high dividends for the long haul (I’m talking 9%+ yields here) is that many just don’t believe it.

And frankly, I can’t blame them. Too many people are paid a lot of money to tell investors that yields like that are impossible. But the truth is you can get a 9.5% yield today—and even more. But even at 9.5%, we’re talking about a middle-class income of $4,000 per month on an investment of just a touch over $500K.

Source: CEF Insider

Below, I’ll reveal how to start building a portfolio that could get you an even bigger income stream than this today.… Read more

Look, I’ll be honest: I’m bullish on our favorite income investments, high-yield closed-end funds (CEFs), as we head toward 2024.

Fact is, these overlooked income stalwarts are still on sale after the 2022 pullback, with the ticker we’ll talk about below going for an absurd 17.2% below its true value.

We can thank CEF investors’ conservative nature for that—they still don’t trust this year’s rebound. So our chance to grab big payouts at a discount is still available. Right now, the portfolio of my CEF Insider service is generating a rich 9.9% average yield.

But that said, we always need to keep an eye on factors that could go sideways in the future, so we can shift gears—and protect our capital and income streams—at a moment’s notice.… Read more

Way too many financial writers have been decrying this market “pullback” we’ve seen in the last few months … but they’re entirely missing the point.

The “boring” truth is that what we’ve been seeing is nothing more than a transition from a panicked market to a more normal one. That’s the kind of setup the drama-fueled press hates—but we income investors love.

After all, in a “normal market,” we can buy our favorite high yielders—and there are plenty out there trading at bargain prices right now—without worrying about “losing our dividends” to price declines.

How do I know we’re shifting to a more normal market?… Read more

Today, more than 18 months after the press started ringing the recession alarm, they’re still at it! And we contrarian income seekers are still happy to take the other side of that argument.

After all, this overdone fear mongering has handed us an opportunity to “lock in” bigger dividend yields than we’ve been able to grab in years. Our buy window is still open—at least for now.

Even the banks are spreading fear these days. Like Société Générale, which recently warned that even a “hint” of a recession could cause a 1987-style crash in stocks. DC-focused sources are taking up the story, too, with Politico plaintively writing: “If the bond markets aren’t scaring you yet, they should be.”… Read more

I recently got a really good question from a reader, who wondered how our current market situation compares to the 2008–2009 crash.

The short answer is that it really doesn’t. But the longer answer is much more interesting, and profitable, because it outlines the unique opportunity we now have to collect historically high dividends from my favorite income plays: closed-end funds (CEFs).

The Current State of Play for Income Investments

On cue, the current selloff has prompted the media to get on the gloom-and-doom train. As a result, we’re starting to see more fear in the markets. It’s tough to understate the impact this fear can have.… Read more

I get it: we’re all frustrated with this sluggish stock rebound. It’s been almost two years since stocks last hit all-time highs, and the S&P 500 is still sitting some 11% below the peak!

So let’s take a look at what’s behind this patience-testing market—and unpack a smart contrarian dividend play to take advantage.

2023 Is Not 2020 (or 2018)

Today’s frustration is understandable because over the last decade, we’ve grown used to markets that bounce quickly after a crash, with the 2020 COVID crash-and-rebound being the classic case. And we recovered so quickly from the 2018 pullback that you can be forgiven if you forgot about that one entirely!… Read more