My Personal Forecast for Gold (and 3 Gold Funds Circling the Drain)

Michael Foster, Investment Strategist
Updated: March 20, 2019

Here’s something that might surprise you about gold: closed-end fund (CEF) managers—at least those I speak to—pay little attention to it.

We’ll dive into why right now. Then I’ll show you three gold CEFs you need to keep away from your portfolio. Because gold’s future looks nothing like the rosy past gold bugs love to use to justify their lust for the yellow metal.

So why do most CEF chiefs (not to mention celebrated investors like Warren Buffett) shun gold?

The short answer is that gold doesn’t produce anything. So when you buy it, you’re speculating that someone will buy it from you for a higher price in the future.… Read more

Weekly Market Summary: U.S. Stocks End February Higher, as North Korea Talks Falter

David Peltier, Senior Investment Analyst
Updated: March 20, 2019

The Dow Jones Industrial Average and S&P 500 fell each of the final three trading days of the month, but all of the major U.S. stock indexes still finished February more than 3% higher. The result is the best two-month start for the S&P 500 since 1991.

Investors have certainly been playing offense in the first two months of 2019, as the following chart shows. Industrial and technology names have led the way higher year-to-date, while defensive sectors (healthcare and utilities) have lagged.


Source: Bespoke Investment Group

Minimal Trade Progress in Asia

President Trump was in Vietnam this week, meeting with Kim Jong Un of North Korea.… Read more

3 “Dead Money” Dividend Aristocrats to Avoid (3 to Buy Instead)

Brett Owens, Chief Investment Strategist
Updated: March 20, 2019

The stock market is way up and ironically, that’s terrible news for us dividend investors. Yields are in the tank yet again. The S&P 500 pays a measly 1.9% today. If you have a million-dollar portfolio, that’s a lousy $19,000 per year in income. Pathetic.

Most people invest their money in index funds like those that mimic the S&P 500. We can do better – four-times better, to be specific – and raise our dividend income by 400% simply by selling these mainstream plays and buying bigger payouts that are better values.

Specifically we’re going to discuss stocks, bonds and funds that pay 7.3% to 8% instead of the broader market’s lame 1.9%.… Read more

Don’t Be Fooled: This 13.7% Dividend Is Deadly

Michael Foster, Investment Strategist
Updated: March 20, 2019

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

5 Dividend Stocks That Haven’t Yet Rallied – But Will

Brett Owens, Chief Investment Strategist
Updated: March 20, 2019

We contrarians stayed calm through the market’s fourth quarter hissy fit. We not only held onto our shares through November and December but we also added dividend payers opportunistically to our portfolios.

Now, it’s time for us to be a bit more conservative. Most US stocks have rallied so much that they are now “overbought.” This means they’ve gone up pretty far pretty fast and are due for a breather (or, perhaps, another correction).

Of course certain elite dividend growers are still good long-term buys at current prices (aren’t they always). And a select five-pack of these picks also represents solid short-term purchases as well.… Read more

I’ve Kept My 2 Top Dividend Stock Tips Secret—Until Now

Brett Owens, Chief Investment Strategist
Updated: March 20, 2019

Let’s face it: this frothy market has made it much tougher to uncover the big, cheap dividends you need to fill out your retirement portfolio. So today we’re going to fight back with my top 2 “off-the-record” strategies for honing in on 7.4%+ dividends that still have a lot of upside ahead.

First, to get a sense of the vice the rebound has locked income investors in, check out this chart:

Stock Bounce Crushes Yields

That amounts to an 18% bounce since Christmas Eve, which has sliced 15% off the S&P 500’s dividend yield (because yields fall as prices rise). As I write, the average S&P 500 name dribbles out a 1.9% payout—less than inflation!… Read more

Revealed: My Personal 3-Point “When to Sell” Checklist for CEFs

Michael Foster, Investment Strategist
Updated: February 25, 2019

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

Weekly Market Summary: Nasdaq Snaps 8-Session Winning Streak As Earnings Season Winds Down

David Peltier, Senior Investment Analyst
Updated: February 23, 2019

The U.S. and China held another round of trade talks in Washington D.C. this week, ahead of the looming March 1 deadline for potential tariff increases. Trading activity was relatively quiet during the holiday-shortened week and the Nasdaq Composite Index ended an eight-session winning streak on Thursday.

Fed on Hold, Q4 GDP on Deck

Investors digested the minutes from the January FOMC meeting on Wednesday and Fed funds futures are now factoring in a 92% probability that the committee will take no action with interest rates in either direction in 2019.

Looking ahead to next week, Fed Chairman Powell will be on Capitol Hill on Feb.… Read more

The Dividend Bargain Bin: 3 Cheap Stocks Paying 5.3% to 6.3%

Brett Owens, Chief Investment Strategist
Updated: March 20, 2019

Stock-market selloffs provide great times to buy big dividends. The stock market was a relentlessly receding tide in the fourth quarter, which is bad for “buy and hope” investors but quite helpful for income specialists like us.

Let’s consider high-quality real estate investment trust W.P. Carey (WPC). This REIT looks good at most prices, but the market gave us an exaggerated dip in December-early January that spiked its yield to nearly 6.5%. Savvy, patient investors who bought on this dip (like my Contrarian Income Report subscribers) didn’t just enjoy an excellent yield on the higher end of its five-year range – they also are sitting on 17% gains in just a matter of weeks!… Read more

Why CEFs Will Soar in 2019 (and NOW is the time to buy)

Michael Foster, Investment Strategist
Updated: February 21, 2019

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