Author Archive: Michael Foster

Today I’m going to show you a closed-end fund (CEF) yielding 13.7% that sounds—and is—too good to be true.

If you hold it, now is the time to sell.

The fund I’m talking about is Eagle Point Credit Company (ECC). Today we’re going to dive into all the reasons why ECC is a CEF to avoid. I’ll also give you five takeaway tips you can use to steer clear of funds like it in the future.

Let’s get started.

CEF Danger Sign No. 1: NAV and Market Price Go Haywire

As you can see below, ECC recently saw its net asset value, or NAV, plummet 26%, erasing three years of gains overnight:

ECC’s Underlying Portfolio Collapses …

In a normal situation, you’d expect investors to sell fast.… Read more

Income investors are typically a conservative and prudent bunch. Focused on a sustainable income stream, they often look for a sign to avoid a big price drop.

So when it comes to one of the highest-yielding investments of all—closed-end funds (CEFs)—how can you know when the time has come to sell?

I’ll tackle that question with a 1-2-3 approach to CEFs that will help you avoid the kinds of value traps that promise big dividends but really deliver big losses.

Sell Signs Not Always Easy to Spot

First off, it’s easier to know when to buy than when to sell.… Read more

If you own a diverse portfolio of closed-end funds (CEFs), you’re probably sitting on some nice gains in 2019—and there’s a great chance those gains have crushed the S&P 500.

So here, at nearly the two-month mark, it’s worth pausing to see where things stand, and where we should be looking for the next big winners.

Big Gains Everywhere You Look

So far, the average CEF is up 7.5% in 2019 and February isn’t even over. This run-up is everywhere, with only five of the nearly 500 CEFs tracked by our CEF Insider service slipping on the year.

The few funds that are down have nothing to do with the rest of CEF-land.… Read more

Today I’m going to reveal a powerful secret that could boost your dividend income 4X.

I’m talking about a massive 7.5% income stream here (or nearly 4X the yield on the average S&P 500 stock)—and your capital will grow nicely while you pocket your dividend cash, too.

Solid payouts like that put financial independence within reach, because with just $500K invested, a 7.5% yield would hand you $3,125 a month in income. That’s higher than the $2,600 the average American makes.

And unlike that average American, you won’t have to troop off to work every morning to get your “paycheck.” Plus you won’t have to sell a single stock in retirement to pull this off.… Read more

The 2019 rebound has done a lot to revive most people’s portfolios. But there’s a new trap you need to dodge as the market ticks up: the risk you’ll stumble into an overbought stock (or fund).

But don’t take that to mean stocks are pricey—far from it! The S&P 500 is barely up from the start of 2018 and still far from its all-time highs, which is ridiculous when you consider last year’s near-20% earnings growth.

So it’s pretty easy to see that stocks are still ripe for buying.

But there is one sector I am worried about—and it brings me to the first of 3 closed-end funds (CEFs) I want to warn you about today.… Read more

If you’re like most people, you’re wondering one thing right now: can stocks keep soaring following December’s nosedive—even after spiking 8% in January?

The answer? Absolutely.

To get at why I’m so sure, we’ll first go a couple steps further than headline-driven “first-level” investors do. Then I’ll give you a way you could double (or more) your rebound gains thanks to a terrific closed-end fund (CEF) yielding 7.2%—and “spring loaded” for 35% returns this year.

The Ignored Connection Between Jobs and Stocks

To get at what’s in store for the markets in 2019, we have to go back to 2009 and zero in on one thing: jobs.… Read more

It happened so quietly, you may not have even noticed. But the script has flipped on interest rates—and today I’m going to give you my favorite way to profit. (hint: this buy pays an 8.8% dividend—enough to hand you $8,800 a year in cash on every $100k invested—and is poised for quick 10% price upside, too!).

Let’s start at the beginning.

A Low-Key 180

I’m sure I don’t have to tell you that the big story of the last three years has been the Fed’s aggressive rate hikes. But the big story of the next three years will likely be a lack of aggressive rate hikes.… Read more

As investment strategist at CEF Insider, it’s my job to tip you off to the best closed-end funds (CEFs) out there. But it’s also my job to steer you away from those that are, well, terrible.

So today we’re going to zero in on four CEFs whose massive dividends (up to 12.7%!) might tempt you to buy. But doing so will lock you into an ever-shrinking income stream while the share price crumbles beneath your feet.

The first red flag? All four of these funds are from Wells Fargo (WFC), a bank that’s been at the center of various scandals for years now, starting with the 2016 fake-account fraud that took down Wells’ CEO at the time.… Read more

Wondering if it’s too late to cash in on the late-2018 market mayhem?

If so, great news! There are still plenty of bargains to be had. And today I’m going to show you three great funds that are still cheap (though they won’t be for long).

The best part? Each throws off hefty dividends upwards of 7%!

Of course, when discounts like the ones on these three exist, you’re right to ask why. The answer is simple: because these three funds are closed-end funds (CEFs), they’re off most people’s radar. That means they’re slower to snap back from a market decline than, say, a fan favorite like Apple (AAPL).… Read more

With the market on the rise from its Christmastime lows, it’s natural to wonder if you’ve missed out on the rebound.

Good news: you haven’t—and today I’m going to tell you why we’re still looking at a terrific buying opportunity, even though stocks have gained more than 5% since bottoming in late December:

The Recovery Is Here

The 5.3% jump since the start of 2019 isn’t the result of fundamentals (those haven’t changed), new news (there haven’t been any significant developments) or an end to political gridlock (the shutdown has remained in effect). Instead, it’s been a clearly psychological change: with the new year, the market has a new attitude.… Read more