These Stealth Funds Get You Back in the Green (and Yield 7%+)

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There’s a joke going around that the S&P 500 isn’t the S&P 500 anymore. It’s now the “S&P 5.”

(Well, last Thursday, the five got punched in the face. With no meaningful dividends to cushion the fall, it was all “red on the screen.”)

I’m talking about the five mostly dividend-less stocks that have been driving the rebound since March—tech darlings and low/no yield wonders Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOGL) and Facebook (FB).

Rebound Leaves Dividend Investors Behind

If you’re not holding these big names, or if you only have a small position, well, the joke’s been on you (with the exception of last Thursday, of course!).… Read more

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I don’t know why you’d try to cobble together an income stream with miserly ETFs when there are plenty of closed-end funds (CEFs) trading at big discounts, even after the huge market rebound we’ve seen since March.

What’s more, many of these CEFs are throwing off life-changing 7%+ payouts!

Why are we seeing some great deals in CEFs now? Because the folks who invest in these funds tend to be slower to react to events than the jumpy crowd holding the typical S&P 500 stock. That lag gives us a nice opportunity to buy while these funds’ prices are still deeply discounted from the value of the assets in their portfolios (a figure known as the net asset value, or NAV).… Read more

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There’s a strong buying opportunity unfolding in an ignored corner of the market right now. Steady dividends of 5.8% (and higher) are waiting for savvy contrarians who jump on it.

By “savvy contrarians,” I, of course, mean us!

And the corner of the market I’m referring to is municipal bonds.

If you’ve been following the muni-bond saga over the last two months, you might find my enthusiasm a bit unfounded. After all, the coronavirus is hammering the finances of cities and states across the country and driving up the risk of muni-bond defaults—right? Not so fast.

Your Muni Default Risk? 0.042%Read more

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Subscribers to my CEF Insider service are asking me a lot about corporate bonds these days, so today we’re going to take a close look at it—and what it means for bond funds.

First, let’s talk about interest rates, which are plunging.

Debt Getting Cheaper 

This means companies pay a lower rate than ever when they issue bonds. When rates fall, it can make sense to take on more debt, because you can use that debt to raise cash. If you don’t need that cash, you can pay off the debt later at a low cost because, again, rates are so low.… Read more

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I don’t know why you’d try to cobble together an income stream with miserly ETFs when, thanks to this selloff, we’ve got a huge sale on closed-end funds (CEFs) throwing off life-changing 7%+ payouts.

Why are CEFs a great deal now?

In short, the coronavirus scare has caused a “panic disconnect” between many of these funds’ share prices and the value of the assets in their portfolios, known as the net asset value, or NAV.

These discounts are a quirk that only exists with CEFs, and they make our plan simple: buy when discounts are particularly wide, then ride these markdowns higher as they evaporate—pulling the fund’s market price up with them.… Read more

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I’m annoyed with this bubbly stock market. It’s making it nearly impossible for regular people to find decent dividends.

Sure, we’ll always take upside, and despite overdone drops due to the coronavirus, the market has handed us a 4% total return since the New Year, building on the 31% it delivered last year.

But where the heck do we invest our gains?

Truth is, if you want to deploy cash into higher payers, you’re in for a tough slog: the S&P 500 yields just 1.7% today, a low we’ve only seen a couple times since the financial crisis.

US Stocks Rarely Pay so Little

Treasuries?… Read more

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Brilliant bond manager Jeffrey Gundlach—aka the “bond god”—has decreed that it’s time to sell “junk” bonds. And he’s gone as far as to say that one-third of corporate bonds should probably be rated as junk.

Gundlach is one of the few “gurus” that we pay attention to. He called the subprime mortgage crisis ahead of time in 2007, an epic rally in US Treasuries earlier this decade, and President Trump’s election in early 2016 (when few gave the Republican candidate a chance.)

And his two closed-end funds (CEFs) are excellent long-term additions to a retirement portfolio. Over the last six years his two DoubleLine funds have roared to 72% and 54% total returns (with the majority of these gains coming as cash dividends:)

DoubleLine CEF’s Deliver: Distributions Plus Gains

But no guru is perfectly clairvoyant!… Read more

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I run into far too many investors who think the best way to build their bond income is to buy through an ETF.

It makes sense. After all, buying corporate bonds “direct” means playing in the murky over-the-counter market, or forking over a hefty brokerage commission.

What’s more, the media—with help from ETF providers’ marketing departments—has most folks believing an “automated” ETF always beats a human manager.

So it follows that more people are buying ETFs like the Bloomberg Barclays SPDR High-Yield Bond ETF (JNK). With one click, you’re getting a portfolio of corporate bonds throwing off a nice 5.6% dividend yield—and charging just 0.4% of assets.… Read more

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Members of my CEF Insider service often tell me they’d love to know a lot more about the people at the helm of closed-end funds—the good, the bad and the ugly.

It makes sense: after all, when you buy a CEF, these folks play a huge role in whether you notch a big gain (and income stream) or, well, not so much.

An Insider’s View

As one of the few analysts who focuses solely on CEFs—especially smaller CEFs, with market caps of $1 billion or less—I’ve had several conversations with managers at CEF companies from across the market.

A common theme?… Read more

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Buy funds with the lowest fees and you’ll retire earlier. That’s the so-called “wisdom” in investing, right?

Too bad it’s dead wrong.

Today I’m going to show you how. I’ll also name an incredible fund that racked up a monster 338% return in the last decade, crushing its “dumb” index-fund alternative by nearly 4 to 1!

Plus, this unsung income play pays a safe—and growing—8.6% dividend (paid monthly, no less). That’s enough to hand you $3,583 every month on a $500K nest egg.

Leaving $1,000,000 on the Table

Before we get to that, let’s look at how obsessing over fees can cause you to miss out on thousands of dollars—maybe even a million!… Read more

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