Start 2023 With These Tax-Free Dividends (Yielding Up to 9%)

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What if I told you there was a way for you to get a steady 9% dividend tax-free?

My guess is you’d be interested, especially after the tough year we’ve endured. Sure, 2023 is looking better, but no one knows what’s coming our way when it comes to inflation and rates, so more volatility is pretty much guaranteed. So a steady payout, especially sans taxes, could be the perfect fit for your portfolio.

Many investors’ response to the past year has been to go to cash. And while that may help avoid losses, it also puts you in the path of inflation running near 8%.… Read more

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Municipal bonds are too often ignored by investors. Which is a huge missed dividend opportunity.

It’s too bad, because billionaires have been using “munis” to anchor their portfolios for years. And with good reason: as we’ll see in a second, munis can perform well when rates rise. They also pay a high “hidden” yield that beats anything you’d get on a Treasury—and most stocks.

“Munis” Offer Safe, High—and Tax-Free—Yields

I say munis’ yields are “hidden” because they’re tax-free. If you’re in a high tax bracket, I probably don’t have to tell you how valuable a tax-free yield is, but the numbers here are very compelling.… Read more

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We’ve got a pullback-driven (and tax-free!) dividend opportunity waiting for us now, and we can thank the Fed’s looming rate hikes for it. It’s a “safety first” closed-end fund (CEF) paying a 4.5% tax-free dividend and trading at a rare 8.4% discount to its “true” value.

This opportunity comes our way through municipal bonds, or “munis.” If you follow the market for these bonds, which are issued by state and local governments to fund infrastructure projects, you know that they’ve pulled back this year:

Munis Slip, Giving Us an “In”

A 2.9% drop, as we see here in the iShares National Muni Bond ETF (MUB), the benchmark ETF for the space, is small compared to the much bigger declines in stocks, but this is pretty rare: as an asset class, muni bonds are less volatile than other kinds of bonds, let alone stocks, which is why any short-term drop tends to be a buying opportunity.… Read more

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There’s a group of 7%+ dividends out there that are perfect for today’s market. They’re far less volatile than “regular” stocks, their payouts are tax-free, and (for now) you can get them for a steal—as cheap as 93 cents on the dollar!

That puts them high on the list of “refuges” from the speculative stocks the mainstream crowd is fleeing these days—and we want to make sure we get in first! (And we’ll do that with two muni-bond funds we’ll name below. Their tax-free yields could be worth up to 8.9% to you, depending on your tax bracket.)

I’m talking about municipal bonds—specifically municipal bonds we can buy through my favorite high-yield investment: closed-end funds (CEFs).… Read more

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I’m guessing you heard about the plunge in Tesla (TSLA) stock spurred by founder Elon Musk’s recent tweet asking if he should sell 10% of his shares.

(The tweet—a poll of Twitter users—garnered a positive response, by the way; Musk says he’ll abide by it.)

I know—another bizarre Musk tweet doesn’t seem to mean much to us income investors. But this one is different, because as hard as it may be to believe, it’s telling us one thing: buy municipal bonds—an asset class many investors dismiss as “sleepy.” That’s not true: there’s a reason why “munis” are favored among billionaires, starting with their huge tax-free dividends.… Read more

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The 10-year Treasury is storming past 1.6% yet again. Look out, high yield!

I kid because I love (income). And one-point-six just doesn’t do it for me. Plus, remember, this bounty does not escape the tax man. Any interest income we earn from Treasuries—no matter how sad—is subject to federal and state taxes.

So, if we’re multiplying a nest egg (let’s use $500K) by 1.6%, we must remember that the final answer is probably not $8,000 in annual income. Because if we’re raking in income from any other sources, we should lop off a chunk of this for taxes.

Interest Received is the official IRS tax term, for my fellow tax wonks.… Read more

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These days, many of the dividend investors I talk to feel squeezed between:

  1. Weak yields (which have plunged as stocks have surged) and
  2. High taxes (which are likely to rise further).

You’re no doubt feeling this pinch, too. The good news is that there’s an investment that lets you wiggle out of this trap, regularly offering steady-as-she-goes dividends up to 5%.

There’s another nice twist that works in your favor here, because these payouts are tax-free, so they could be worth a lot more to you—I’m talking payouts north of 7.5% with tax savings factored in, depending on your tax bracket.… Read more

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Let’s break out of today’s zero-rate wasteland and help ourselves to huge, safe payouts yielding all the way up to 8.3%. And these massive payouts are tax-free too!

And, no, we won’t be hiring a team of CPAs to pull this off—nothing so expensive and impractical. Instead, we’re going to set ourselves up with a closed-end fund (CEF) that holds municipal bonds, or “munis.” And thanks to their tax-free nature, if you’re in the top tax bracket, a muni bond paying, say, a 4% dividend could be worth 7% or more to you.

I’ll give you a specific CEF that’s worth putting on your list now in a second (its 5% stated yield could be worth an outsized 8.3% to you, if you’re in the top tax bracket).… Read more

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Infrastructure spending is back in vogue, and we’ve got a chance to grab a piece of it tax-free.

That would be through municipal bonds, investments most people see as sleepy (though I have no idea why) but are poised to roll as President Biden’s $2-trillion infrastructure package (or some version of it) becomes law. That’s because the law will usher in an explosion of new “muni” bonds—and there are select actively managed closed-end funds (CEFs) ready to pick up the best ones.

By buying them now, we can nicely front run this muni-bond wave.

Tax Savings Can Boost Your Payout 20% (or More)

The best part of buying muni bonds (which are issued by states, cities and some non-profit entities, like hospitals, to fund infrastructure) is that the income they generate is 100% tax-free.… Read more

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Does a rising 10-year Treasury yield mean we should move on from municipal (muni) bonds? We’ll talk muni strategy in a moment. First, let’s pay homage to these tax-efficient payers.

Munis are superior to Treasuries two ways. First, they pay more. Even with the 10-year rate popping above 1.6% earlier this week, we can double or triple our dividends with munis. The iShares National Muni Bond ETF (MUB), for example, yields 2.1%, which is 30%+ better than the still-chintzy T-Bill.

Plus, munis have tax benefits. MUB is an easy-to-buy vehicle with a tax-advantaged payout that is higher than its stated 2.1% yield.… Read more

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