This 5.5% Tax-Advantaged Dividend Soared Overnight (How It Could Happen Again)

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Every now and then in income investing, we get a sweet setup where a “boring” high yielder absolutely soars—practically overnight.

I recently saw such a scenario play out with a closed-end fund (CEF) called the BlackRock Municipal Income Fund (MUI). I bring it up now because what happened with MUI has a lot to teach us about how we can get stock-like gains from a so-called “boring” income play like this.

Despite its sleepy-sounding name, MUI is what I consider a “triple threat” investment because it can pay us in three different ways:

  1. Its dividend, which yields a high 5.5% and has been remarkably stable, even throughout the low-rate 2010s.

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There’s been a massive discount building in a pocket of the market where you can get big dividends that are entirely tax-free.

And I’m going to show you three “1-click” ways to tap this income investor’s wonderland today.

I know that tax-free anything these days sounds impossible, but in this case, I assure you it’s not. The key is investing in municipal bonds, which give you a passive income stream that is entirely tax exempt at the federal level. Plus it’s also exempt from state taxes in many situations, too.

That means a 4%-yielding municipal bond, or “muni,” is more like a 5.3%-yielding dividend stock for a family earning $100,000 per year—and that’s before we factor in state taxes.…
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