Articles

With over 500 closed-end funds (CEFs) on the market, how do you choose the best one?

It’s not an easy question to answer, because there are literally dozens of metrics any CEF investor should look at before buying.

But you don’t have to worry, because in a moment, you’re going to get the “guts” of the 5-point system I’ve carefully designed to pick winning CEFs for our CEF Insider service.

So why is it important to have a good system?

Because if you don’t, you could find yourself holding an empty bag—like investors who bought the Virtus Total Return Fund (ZF) at the start of the year because they were seduced by its 15.3% dividend yield.… Read more

If you buy a stock that eventually increases its dividend by 100% in the coming years, you’re going to double your money or better as that happens. Find a payout with 200%, 300% or even 500% upside? Then we have a secure way to total returns up to 500%.

(We’ll discuss five generous payers in a minute, with price upside up to 500%.)

Why does dividend growth matter so much more than earnings, sales or even cash flow growth? Well, we income investors buy a stock for one of three reasons:

• A meaningful current yield
• The potential for a higher yield-on-cost over time, and/or
• Price gains.

Do you have a reliable way to generate monthly cash flow from the dividend stocks you own today? If not, why not?

Many “first-level” investors hope that their stocks will go higher so that they can sell them for cash flow. But, if you follow rich people, you’ll notice that they never actually sell any assets – they instead use them to generate more and more cash flow.

We can – and should – do the same. We can “tap” dividend stocks for regular cash flow. We can even turn the shares we own today into monthly dividend payments that provide us all the income we ever need for the rest of our lives (and we can hang onto the shares and enjoy price upside, too!)… Read more

Cash payouts of 8% and more (often paid monthly), plus price upside of 10%, 20%, sometimes even higher.

That’s what you get with closed-end funds—and you can often get it in just one buy!

But as terrific as these off-the-radar funds are, you still need to be careful: of the 500 or so CEFs available to us, only a handful are worth your attention. Others give you mediocre returns, at best. And some can drain away your cash fast!

And in a year that’s been challenging for just about all asset classes, the worst CEFs are showing their stripes, with the real laggards down double digits, and for good reason—their portfolios (as measured by net asset value, or NAV) can’t generate the performance they need to push their share prices higher.… Read more

Be careful how you buy your bonds. The most popular tickers have a few “fatal flaws” that’ll doom you to underperformance at best, or leave you hanging in the event of a market meltdown at worst!

Let’s pick on the widely followed and owned iShares iBoxx High Yield Corporate Bond ETF (HYG) as an example. It has attracted nearly $15 billion in assets because:

1. It’s convenient – as easy to buy as a stock.
2. It’s diversified (for better or worse, as we’ll see shortly) with 1,005 individual holdings.
3. It pays – 6% today, to be specific.

The accessibility of funds like HYG appears appears cute and comfortable enough.… Read more

I get a lot of questions from readers about high-paying “preferred shares.” And most of these queries have one thing in common: worry!

You see, many of these folks are concerned that preferreds—known for their outsized dividend yields funded by safe cash flows—will get swamped as interest rates rise.

So today I’m going to show you why you can set these fears aside. Further on, I’ll reveal a preferred-stock fund that lets you rope in an outsized 7.3% cash dividend and price upside, too.

First, I should say that preferred shares aren’t alone in stoking investor fears. Other high-yield investments are, too, such as real estate trusts (REITs) and utilities.… Read more

If you’ve filled up your car lately, I don’t have to tell you that oil prices have come back to life after years in the doldrums.

So today I’m going to give you 3 terrific funds that let you take back the power. Each one pays 6.5%+ dividends and is set to pack big price gains as oil resumes its rise (and it will).

An Income Gusher Where No One Bothers to Look

It’s rare to hear the words “oil” and “6.5%+ dividends” in the same sentence. The truth is, many energy stocks don’t give investors an income stream, while a lot of energy funds are fundamentally flawed.… Read more

Do you own the next GE? I’m talking about five dividends that are not as sacred as their shareholders mistakenly believe. We’ll review them in a minute.

First, the warning signs. Many investors were kicked in the gut by General Electric (GE) last year, no thanks to pundits who ignored numerous red flags and encouraged people to buy GE and its historically generous yield. Sure, 5% isn’t “high,” but in a sleepy industrial like General Electric, that’s certainly attractive at a glance.

It also was downright dangerous.

Anyone keeping tabs on the all-important payout ratios for General Electric’s dividend had to see the writing on the wall.… Read more

The best way to learn about a company is directly from the executives that run the business on a day-to-day basis. The problem is, there are thousands of actively traded stocks in the U.S. alone and CEOs rarely make the time to speak directly with anyone outside of their largest investors.

That’s why I keep an eye out for Form 4’s, which is the SEC filing insiders are required to submit within two business days of trading shares in their own company.

You don’t need to take my word for it, rather famed investor Peter Lynch is my inspiration to sift through a virtual stack of regulatory filings.… Read more

By now you may have heard about the huge dividends and soaring price gains offered by closed-end funds (CEFs).

But here’s something that will probably surprise you: you can lock in even bigger—and safer—income streams (I’m talking 7%+ dividends), plus massive upside with smaller CEFs.

I know that sounds counterintuitive, and quite the opposite of what happens with stocks; small-cap companies rarely pay dividends and can collapse overnight.

Go Big the Small Way

The key is to go with small CEFs sporting portfolios backstopped by large cap stocks and whip-smart management teams, like the 3 funds (paying up to 10.1% in cash each) I’ll show you in a moment.… Read more