Crush Your Tax Bill. Bag 4.3% Dividends (with Upside). Here’s How.

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The Contrary Investing Report > NYSE:MUB

Last Thursday, we took a close look at how closed-end funds (CEFs) holding municipal bonds—issued by states and cities to fund infrastructure projects—can help stabilize your portfolio in times like these.

Today we’re going to dig deeper and put some numbers behind how these CEFs can do even more, including handing you a dividend that’s double what you’d get on stocks—and these payouts are tax-free, to boot!

First, here’s what “munis” did during the selloff in the last week of February:

Muni Bonds Hold the Line—Literally

When stocks plummeted, munis were fine. And why wouldn’t they be? As senior government debts, municipal bonds have strict regulations and restrictions that make them less risky than stocks.… Read more

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Last Thursday, we took a close look at how closed-end funds (CEFs) holding municipal bonds—issued by states and cities to fund infrastructure projects—can help stabilize your portfolio in times like these.

Today we’re going to dig deeper and put some numbers behind how these CEFs can do even more, including handing you a dividend that’s double what you’d get on stocks—and these payouts are tax-free, to boot!

First, here’s what “munis” did during the selloff in the last week of February:

Muni Bonds Hold the Line—Literally

When stocks plummeted, munis were fine. And why wouldn’t they be? As senior government debts, municipal bonds have strict regulations and restrictions that make them less risky than stocks.… Read more

Read More

When the market is selling off, it’s easy to panic as big losses rack up in your account.

Here’s the thing, though: going to cash, and fully exposing yourself to inflation, is a guaranteed way to lose. It’s doubly sad to see first-level investors doing this when there’s a time-tested way to survive meltdowns, keep your income stream intact and cut your portfolio’s volatility.

It doesn’t involve panic selling. Instead, it revolves around three simple rules: diversify, be patient and keep a big income stream. Let’s walk through each of these.

  1. Diversify

The first key to surviving a meltdown is to be in several markets at once.… Read more

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Let’s be honest: it’s hard not to be rattled by last week’s double-digit drop in the S&P 500.

And it’s true that if the coronavirus continues to spread, we could see more people holed up in their homes, meaning less spending and less economic activity. Some analysts are already calling for a coronavirus-driven recession.

But let’s not forget that American economic data looks very good right now. The Federal Reserve sees GDP rising a healthy 2.6% in the first quarter of 2020, even accounting for the coronavirus’s impacts. Personal incomes and spending are also rising at healthy levels, so there’s no reason to panic.… Read more

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Americans are blessed with a source of high passive income that is entirely tax free. Thanks to long-standing legislation designed to encourage more investment in our communities, municipal bonds give tax-free income to most people, and since you can get these “munis” in a fund that pays out 4.7% dividends, getting a really high income stream without the tax burdens has gotten really easy.

But not everyone is celebrating.

A lot of fears about muni bonds have blanketed the financial press over the last few years, in no small part because muni bonds, with their low volatility and steady income streams, tend to appeal to investors who want to avoid risky assets the most.… Read more

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Today I’m going to show you how one lucky group of investors nailed a once-in-a-lifetime shot at a huge, tax-free dividend stream and a quick 18% gain, too!

Well, not exactly “once-in-a-lifetime.” Because this opportunity is still waiting for you today—you just need to know how to tap it.

In a moment, I’ll give you the goods (including a name and ticker) on a closed-end fund (CEF) to target now. It hands you a 4.2% dividend you likely won’t have to pay a penny of federal tax on (and your payout could be exempt from state taxes, as well). 

To cut to the chase, thanks to its lucrative tax breaks, this fund’s 4.2%… Read more

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With the whipsawing market we saw in early December—and now a snap back to near all-time highs—now is the perfect time to talk about one of the biggest questions you’ll face as a closed-end fund (CEF) investor: how do you know when to sell a fund?

Unfortunately, there’s no simple answer—and often investors who use conventional sell signals, like a falling market price, will end up selling at the worst time.

That leads me to my cardinal rule with CEFs: it’s easier to know when to buy than when to sell. If the fund is well managed, has a strong track record, is deeply discounted and has a relatively safe dividend, it’s generally a screaming buy.… Read more

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If you’re like many folks, you might be looking at your stock gains this year and dreading the tax bill headed your way in 2020.

That makes now a great time to consider the only (tax-) free lunch in investing: municipal bonds. I’ll name one play on these retirement-changing investments in a moment. This unusual fund yields an outsized 5.1% today and sets us up for a “steady as she goes” triple-digit gain, too.

First, let’s talk a little more about the tax side of “muni” bonds: these investments pay a 100% tax-free dividend (so their “real” yields could be much higher for you, depending on your tax bracket).… Read more

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Where are we to turn for high, safe dividends these days? Certainly not 10-Year Treasuries, unless you think you can scrape by on their 1.7% yields.

I’ll save you the calculation: you can’t, because that yield matches the inflation rate to the decimal point.

Your “true” income? $0.

The S&P 500 isn’t much better: for a pittance more (a 1.84% average yield), you’re exposing your nest egg to this:

When a 1.8% Dividend Costs You 20%

But don’t, because I’ve got a better way—a low-key alternative I call a “layup dividend.” If you’re a basketball fan, you know what I’m talking about: the layup is the simplest shot in the game, where you simply “lay” the ball over the rim into the net.… Read more

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Municipal bonds are the perfect play for this trade-war obsessed market—they’re far more stable than your typical stock and they pay bigger dividends, too.

And today I’m going to show you how to tap the very best “munis” for a 4.3% average dividend yield.

That’s just the start.

One of the three “steady Eddie” buys I’ll show you below even pays an outsized 4.7% dividend. Plus, it trades at a discount to its “true” value, adding to its already legendary stability and setting us up for some nice gains, too.

Turning a 4% Yield Into 5.8%

Here’s something that’s often overlooked about muni bonds: their payouts are tax-free to most Americans.Read more

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