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There are hundreds of closed-end funds (CEFs) out there, and almost all of them have an investor they’re perfect for.

I say “almost” because there are a few that are, in my view, not appropriate for any investor. These CEFs are highly speculative and, for the most part, don’t provide a dividend. That flies in the face of a key reason to own CEFs in the first place: high payouts! These funds typically yield around 8%.

We also generally want to be wary of new CEFs with little performance history. When you combine that with a lack of payout focus, you can find yourself taking on some very significant risk.… Read more

The nervous types are being chased out of Bondland. Fear! Higher rates forever!

Well, no, not likely. Bonds have a “killer feature” for income investors. When their prices drop, their yields rise. We can then snag better deals and secure more dividends for our dollar. That is, if we have the smarts and guts to buy low.

Not everyone does, by the way! Few vanilla investors are taking advantage of the bond bargains right now. They are applying a different approach—panicking.

This is reflected in the MOVE index, which is the VIX (stock market volatility index) equivalent for bonds.… Read more

We love it when a stock “pays us back” in dividends. The faster, the better!

Most people don’t get this luxury. They’re stuck “grinding it out” with the S&P 500’s 1% payers.

Not us. We’re hunting for dividends big enough to let us retire on our payouts alone. We’re talking 7%, 8% and larger divvies.

Two high-payers leap to mind here—and not only because of their rich payouts: the JPMorgan Equity Premium Income ETF (JEPI) and the Global X S&P 500 Covered Call ETF (XYLD).

We like both because they let us create a “synthetic” yield on our paltry S&P 500 dividends: 7.2% from JEPI, and 8.5% for XYLD.… Read more

The market has served us up a tidy opportunity on a closed-end fund (CEF) yielding an eye-popping 13.1%.

What’s more, this fund is oversold, at a 12.1% discount to net asset value (NAV).

Before I name this CEF, let me explain why this opportunity is in front of us. And since the fund in question holds corporate bonds, we need to start with interest rates.

It’s not news that since the end of the pandemic, the Federal Reserve has focused on fighting inflation. Whether or not it’s brought enough firepower to that fight is something we can debate, but the end result is that borrowing costs have been going up.… Read more

For a while, utilities were that sneaky play on AI. A picks-and-shovels provider, if you will.

Here’s why: AI usage is booming. What does AI use? It uses energy. AI is a notable energy hog, so the local utility company was the sneaky early beneficiary. Power prices would go up with more demand from that new data center down the street, and it was another customer for this utility’s captive audience.

Now things have changed a bit. Everyone publicly hates data centers:

Source: Economist/YouGov

What does it mean when poll numbers like this happen? It means everyone who’s left to sell utilities has already sold.… Read more

Let’s break down this cloud of pessimism hanging over the economy. As far as I can tell, it’s mainly coming from two sources:

1. The bond market.
2. The labor market.

Concerns around both are overblown, and that’s been a plus for us at my CEF Insider service. It’s pushed out the discounts to net asset value (NAV) on these funds, setting up some nice buying opportunities over the last few months.

It’s increased the dividend yields on some of these funds, too. In some cases near double digits.

General American Investors (GAM), one of the more popular equity CEFs, tells the tale here.… Read more

Yeah, we’re here for the dividends. But isn’t it nice when we buy a stock and it goes up, like, right away?

And it happens for us. We are contrarians! We buy payers when they are out of favor because that maximizes our yield (more dividends per dollar!) and minimizes our downside (everyone has already sold!).

Sometimes this works and we buy, say, a 6% dividend stock that quickly gains 10%. The hated setup gave us a quick paper buck. Cool—but now what do we do?

Well, we need to understand that a dividend acts like an anchor in both directions.… Read more

This year, Christmas (for dividend investors!) is set to arrive two months early.

Our gift?

A chance to grab our favorite high yielders—closed-end funds (CEFs) paying 10% and more—on an early “year-end” sale.

How cheap are we talking here? How about 90 cents on the dollar? In some cases less.

We’ve got an early start to the year-end tax-loss selling season to thank for this opportunity.

Forget Year-End: The Best Dividend Deals Are Right Now

Our play starts with the fact that CEFs are a small market, with only around 365 out there. That means they’re mainly held by individual investors, since most CEFs aren’t big enough to move the needle for the big guys.… Read more

Ten-year Treasuries yield 5.3%. We’re still not buying.

Because the truth is, that 5.3% yield is an illusion, for two reasons.

First, inflation is at 3.4%. Knock that off your 5.3% yield and you’re left with a real return of just 1.9%.

And second, if the government continues to print money to meet its obligations (likely!), it could fuel more inflation, and higher bond yields. That increases the likelihood that anyone buying a Treasury today will sell at a loss if they do so before maturity.

So where does an income investor turn?

Two words: US stocks.

Trouble is, the S&P 500 yields a mere 1%.… Read more

Is there anything better than a closed-end fund (CEF) paying 7% or more in dividends? I’ll tell you what: it’s when that fund is discounted by 10% or more with respect to the fair value of its portfolio. This is a feature, a fantastic one, of CEFs: they tend to trade at discounts to their fair values.

Why do CEF values wander from the underlying value of their portfolios? It’s because these vehicles issue fixed amounts of shares, so when investors are greedy, they can bid up the prices of these funds in excess of their net asset values, or NAVs.… Read more