Author Archive: Michael Foster

Buying real estate investment trusts isn’t like buying other stocks; despite their high yields and big long-term returns, REITs require a bit more attention and a bit faster action than more popular dividend-payers, like blue chips and dividend-growth stocks.

But it’s more than just speed and care. To win with REITs, you need to follow three rules—and I’m going to show you those today.

These REIT rules have never been more important than they are now. Broadly, REITs are getting more valuable, but the market is getting more scared of them. This disconnect makes no sense and is partly the reason why two extremely healthy and valuable REITs—Sabra Health Care REIT (SBRA) and Care Capital Properties (CCP) recently merged.… Read more

Something wonderful happened last week: one of the municipal-bond CEFs I recommended to ContrarianOutlook.com readers more than two months ago raised its dividend.

The Pioneer Municipal High-Income Advantage Trust (MAV) hiked its payout by over 5%, giving the fund a 5.3% yield.

The stock price caught a lift on the news, bringing it to a 4.3% total return in a little more than two months, outperforming the municipal-bond fund benchmark iShares National Municipal Bond Total Return Fund (MUB) and the SPDR S&P 500 ETF (SPY).

Trouncing Munis and Stocks

The hike came after a series of dividend cuts dragged down the fund’s share price over the last few years:

Falling Yields and Prices

The lower yields didn’t do much to attract new investors, so the fund’s price kept slumping along with the weaker income.… Read more

Let’s say you’re looking to retire and want to bring in the average American salary in your golden years.

It’s a good goal—and more than enough cash for many retirees, especially if you live outside places like, say, San Francisco, where the average one-bedroom apartment rents for $3,300 a month (!)

So how much are we talking about here?

As of March 2017, the average US worker took home $896.60, according to the Bureau of Labor Statistics. Assuming 50 working weeks a year, that’s $44,830.

Okay, so we need to get $44,830 in pre-tax passive income. Where are we going to get it?… Read more

Today I’m going to show you why the pundits have this market rally all wrong—and how a group of little-known investments called closed-end funds (CEFs) are the best way to cash in as stocks head higher from here.

Why do I say higher?

Because as I wrote back on March 30, this market is rising for the right reason: soaring earnings.

According to FactSet, first-quarter earnings are up 12.5% for S&P 500 companies that have announced so far, and earnings per share revisions are far more likely to skew upward than downward.

Simply put, American companies are making cash hand over fist.… Read more

Today, I’m going to show you some of my favorite REITs—and a novel way of buying them that lets you do so for 18% off!

But first, there’s one sector you need to avoid: financials.

In fact, you needed to avoid it two months ago, as I warned back on February 28.

What’s happened since then? Nothing good.

Financials Come Up Short

This underperformance you see in the above chart isn’t surprising, considering financials were up over 30% by the end of February—and you can see from this chart that they reached their top just when I called it:

Snapshot of a Correction

What’s going on here?… Read more

If you’re interested in getting into the S&P 500, it seems like a good time to do so. Earnings are rising, GDP growth is strong, the unemployment rate is falling, and wages are heading upward.

There’s just one problem: as I wrote a few months ago, the S&P 500 is a lousy bet.

There are a couple reasons why, the biggest being the income problem. If you buy into the SPDR S&P 500 ETF (SPY) or the Vanguard 500 Index Fund (VOO), you’re going to get a dividend yield of less than 2%. So buy $500,000 worth of those funds and get a whopping $791 monthly in cash dividends.… Read more

Imagine an investment that can double in value in 5 years while giving you a 12% income stream that has actually grown over time.

And what if I told you there are a lot of these investments out there? They’re just not well known.

The reason for that is that they’re closed-end funds (CEFs), an investment that isn’t as popular as mutual funds because most 401k plans don’t offer them. And they’re far less popular than exchange-traded funds because they’re just a little more complicated than something like the SPDR S&P 500 ETF (SPY).

ETFs like SPY are easy to set up and manage, which makes them cash cows for issuers like Blackrock, Vanguard and State Street, even though ETF fees are relatively low.… Read more

In my last article, I showed you funds that pay 6.4%+ yields and give you “crash insurance” in case of a market meltdown. The great thing about these funds is that they also offer tremendous upside in steady or up markets.

If that sounds like the best of both worlds, it’s because it is.

Instead of just buying the S&P 500 in an index fund, for example, you can choose the Nuveen S&P 500 Dynamic Overwrite Total Return Fund (SPXX). It tracks the index, provides extra downside protection and pays out a much higher dividend than index funds, too.

This isn’t the only fund that does this trick.… Read more

I want to let you in on a shocking secret about Vanguard: they’re great active investors.

That’s right. The people almost everyone looks to for low-fee index funds are, in fact, top-flight stock pickers.

Take the actively managed Vanguard Windsor Fund Investor Shares (VWNDX): since inception way back in 1958, it’s returned an annualized 11.4%, despite being long only large cap value stocks (and avoiding more volatile small caps entirely).

Compare that to the passive Vanguard Total Stock Market Fund (VTSAX). Despite the index fund’s lower fees (which first-level investors love and Vanguard touts as a key to superior returns), VWNDX has crushed VTSAX since the latter’s launch in the early 2000s:

Index Investors Get What They Pay For

The Vanguard Windsor Fund has been so successful that it spawned a second fund in 1985, the Vanguard Windsor II Fund Investor Shares (VWNFX), which went on to post a 10.7% average annual return.… Read more

A few days ago, I showed you exactly why now is the time to be greedy—not fearful—when it comes to stocks.

And now, buried deep in the latest gross domestic product (GDP) report is a tiny data point that proves I’m right. It’s the clearest signal in years that now is the time to buy.

I’ll show you 7 funds perfectly positioned to take advantage while handing you safe dividend yields up to 9.3% in just a moment. First, let’s talk about that under-the-radar signal I mentioned.

The report’s headline number showed that fourth-quarter GDP rose 2.1%, slightly above economists’ expectations of 2% growth.… Read more