Today I’m going to give you my full investment forecast for 2018—and name 2 high-yielding closed-end funds (CEFs) poised to soar after the new year rolls in.
But before we get to that, we need to cast a quick eye back over 2017, because 2 things that happened this year are setting us up for big gains next year.
And 2017 was a terrific year for stocks—something that came as a surprise to many folks (but not me).
When we started the year, a slew of fears were encouraging bears to warn of an impending stock-market crash. Then the SPDR S&P 500 ETF (SPY) did this:
A Great Year
I’ve been beating the drum for stocks throughout 2017. In March, I wrote that the market had room to run, for many reasons. The most important was that profits were soaring and would keep going up. “The future of corporate earnings is bright,” I wrote back then.
And corporate earnings have done nothing but climb higher since. For reports released in the fourth quarter of 2017, S&P 500 companies saw their earnings grow by a shocking 10.6%. Will it continue?
Undeniably, the answer is yes.
Why am I so confident? There are a number of things going on, but in my opinion the most important is that we’re seeing GDP growth continue to accelerate—and GDP growth recently rose above the 3% number many economists said was impossible just a year ago:
A Rising Tide for All Boats
More economic activity, more demand and more profit-making opportunities are obviously great for companies. But the gains aren’t being felt everywhere equally. If we look at the stock market on a sector-by-sector basis, we see that tech is the clear winner and energy is the big loser:
Across-the-Board Gains … With One Exception
Since America is still a net energy consumer, this snapshot suggests that the sectors of the market that matter most are those that are benefiting from that 3.3% GDP growth rate.
Keep in mind that the size of the boxes above is relative to how big that sector is in the S&P 500. Technology is the biggest, at 26%, and energy is relatively small, at 6%. That means the bigger and more important parts of the market are doing much better than the smaller parts—and this trend is getting better and better.
Something else to remember: the US consumer, still the main driver of the economy, is getting stronger. Not only is consumer confidence rising, but unemployment continues to shrink—down to a near 20-year low at 4.1%:
A Stronger Consumer
More consumer confidence means more spending, and that translates into gains for tech, which depends on consumer spending in a variety of ways, and consumer discretionary stocks, which benefit only when Americans feel comfortable opening their wallets.
But I can’t imagine blindly buying into these sectors with “dumb” index funds. You’re better off buying these assets at a discount—and with closed-end funds (CEFs), that’s easy to do.
2 Winning CEFs Yielding up to 9.3%
For tech, you can get a variety of FAANG stocks and top-notch tech exposure through the BlackRock Science and Technology Fund (BST). And this fund is trading at a discount: a 4.7% markdown to net asset value (NAV, or what its underlying portfolio is worth).
BST also recently hiked its dividend by over 18%, giving it a 5.9% yield that’s leagues above what your run-of-the-mill tech fund pays. The Technology Select Sector SPDR ETF (XLK), for example, yields a stingy 1.3%—in other words, practically nothing.
On top of BST, if you’re looking for consumer discretionary exposure (and you should be), consider the AllianzGI Diversified Income & Convertible Fund (ACV), which holds Home Depot (HD), Visa (V) and several other crucial companies in America’s consumer economy. You’ll get these assets at a nice 4% markdown, thanks to ACV’s discount to NAV.
But you should get a move on here, because this fund is pretty new (less than 3 years old), meaning it’s still not on many investors’ radars. That’s despite the fact that it’s paying a whopping 9.3% dividend that should have caught the herd’s attention by now.
Here’s an “Extra” $20,400 for 2018
The 2 CEFs I showed you above look great for 2018, but I’d attach just one asterisk that you need to keep in mind: tech and consumer discretionary are 2 of the most unpredictable corners of the market (next to energy, of course).
That means any gains we rack up in 2018 could easily turn to dust when the market takes a turn, which it inevitably will.
So go ahead and grab some quick gains and income from BST and ACV now. But the core of your retirement portfolio calls for a completely different set of funds.
My research team and I have you covered there, too, with our just-released list of the 4 best high-yield CEFs for your retirement portfolio.
These 4 bargain CEFs yield a safe 8.1%, on average, now—and one throws off an incredible 10.4% payout!
To put that in dollars and cents, if you were to drop, say, $200,000, into that fund, you’d trigger a safe $20,400 income stream in just your first year (and higher if you invest more cash!).
But there’s another reason I call these 4 funds “retirement lifesavers” (two, actually).
One is that, thanks to their huge discounts to NAV, each is spring-loaded for easy 20%+ gains next year. But that’s not even the best part. Because thanks to those absurd (and totally unusual) markdowns, they’ll simply trade flat when the market does eventually fall out of bed.
That’s a critical second line of defense for your hard-earned nest egg. And of course, you’ll still be grabbing these 4 funds’ 8.1% average dividends no matter what!
I won’t keep you waiting any longer. Simply CLICK HERE and I’ll give you full details on these 4 funds, including their names, ticker symbols and everything else you need to know.