This 10.4% Dividend Ticks Our 2 “Must-Have” Boxes

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As folks who are always on the hunt for high-yield investments, we love 8%+ paying closed-end funds (CEFs).

CEFs, of course, are renowned for those high payouts—and the vast majority pay monthly. No “regular” stocks offer such a potent payout combo.

Best part is, many CEFs are on sale now: Of the 422 tracked by the CEF Connect screener, 372 currently trade at discounts to net asset value (NAV, or the value of their underlying assets).

That’s a great place to start our search for top-notch CEFs because a discount to NAV is basically free money: it lets us pick up, say, red-hot tech stocks like Texas Instruments (TXN), Amazon.comRead more

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As contrarians, we search for income stocks that vanilla investors hate. Today there are not many dividend deals left. No surprise, with the market levitating since last October.

But! When we expand our search to CEFland, we do find a few closed-end funds (CEFs) left at the bottom of the bargain bin. Today we’ll discuss five that pay between 5.7% and 11.7% and trade at discounts between 12% and 18%.

In other words, these five CEFs trade for 82 to 88 cents on the dollar. Let’s explore whether each dividend is “cheap for a reason.”

General American Investors (GAM)
Distribution Rate: 5.7%
Discount to NAV: 18.4%

General American Investors (GAM) is a straightforward large-cap CEF that holds “companies with above-average growth potential.”… Read more

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It’s undeniable that NVIDIA (NVDA) is the hottest stock out there right now.

In just five years, it’s soared nearly 2,000%. That’s over 80% annualized (!), including both the pandemic and the 2022 selloff. Most of those gains have come in the last year and a half, thanks to the AI boom.

And NVIDIA is perfectly positioned to profit from that boom, with demand for the company’s computer chips so high that it has to pick and choose buyers (NVIDIA has said it’s trying to sell the chips “fairly,” since demand has far outstripped its capacity to make them).… Read more

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If you’re a dyed-in-the wool dividend investor (like me!), you’ve likely taken a look at the big gains folks are reaping on AI stocks … and resigned yourself to missing out on the whole thing.

After all, most AI stocks, like Alphabet (GOOGL) and NVIDIA (NVDA), yield 0% (or close to it!). And we simply demand a dividend before we buy anything.

The good news is we don’t have to miss out—instead, we’re going to go one floor up from the “first-level” options that most folks buy to the “penthouse” of AI investments: tech-focused closed-end funds (CEFs)!

The beauty of CEFs is that by going with these high-yield funds (8%+ payouts are run-of-the-mill in CEF-land), we don’t have to sell the blue chips we currently own!… Read more

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Mr. and Ms. Market are manic. Always have been, always will be. My fellow contrarian, they reminded us of this fact yet again.

Fortunately we were zigging while the broader crowd was zagging.

The herd’s “FOMO panic” last week pushed many of our stocks higher. Vanilla investors covered their ill-timed short positions and scrambled to buy bargains. Like the dividend deals we bought in October!

Did you miss out? Have cash suddenly burning a hole in your pocket? If so, no worries, a few select dividend deals remain.

I’m talking about yields up to 12.3% and discounts up to—get this—46%.… Read more

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Not many people realize it, but there’s a way you can actually get paid to own stocks.

I’m not talking pennies, either. The fund I’m about to show you is capable of generating $64,000 in dividends per year on a $500,000 investment, thanks to its 12.8% yield, as of this writing.

This gives us three things:

  1. A large, reliable income stream with a lower risk of principal loss (unlike many annuity products and other income funds out there, where loss of principal is guaranteed).
  2. Diversification across over a hundred companies in one of the most oversold sectors today: technology—including firms driving the AI revolution, like Nvidia (NVDA).

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If there’s one thing that stands out about the market for our favorite high-yield investments—closed-end funds (CEFs)—in 2023, it’s this: individual investors are still too skittish to jump in.

That’s our chance, because this “lag” means CEFs’ prices haven’t taken off, and these funds are throwing off dividend yields in the same neighborhood they were at the start of 2022—around 7.5%, on average, today. And by being just a little picky (as we will be with the fund talk about a bit further on), we can amp those payouts up to 10%+.

Combine that with the discounts to net asset value (NAV, or the value of CEFs’ portfolios) available across the space, and we’ve got a shot at real upside, especially when you consider how far behind the S&P 500 that CEFs have lagged this year.… Read more

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AI bubble? Bear market rally? I don’t care because I see five dividends between 10.1% and 13.5%.

Now that’s rarified air for yields! A benefit of a manic market such as this, where we have fear alongside insanity at the same time.

The five double-digit dividends we’re about to discuss aren’t tied to individual stocks, either. These payouts are dished by diversified funds with dozens or hundreds of holdings. All have experienced managers at the helm.

They just happen to be cheap because CEFland is still on sale after a rough run in 2022. Which is where we contrarians pick up the case.… Read more

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Do you know how much money you need to retire?

If you’re like most folks, you might think the answer is “too much,” and for good reason. It seems like every day we hear another study or pundit saying we need millions to do so comfortably.

That’s why I was surprised to see a new study out from NetCredit, an online money lender, saying most people would need less than a million dollars to retire. In fact, the company said it’s possible to clock out on just $702,330 in the US as a whole, and in some states even less—like about $470,000 in Mississippi.… Read more

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Bull or bear? Who cares when we can collect dividends between 10.1% and 11.8%.

That’s not a typo. The S&P 500 pays 1.7%. The 10-year Treasury yields two points more at 3.7%.

That’s better—but it ain’t 11.8%!

The same million-dollar retirement portfolio can either generate $17,000, $37,000 or $118,000 per year. Tough choice!

And better yet, the double-digit dividends I mentioned aren’t penny stocks. We’re talking about diversified funds, with dozens of holdings, managed by skilled advisors that often have decades of experience at the helm.

How Do You Spell “Massive Income”? C-E-F.

A couple of weeks ago, we discussed CEFs versus ETFs:

“If I can give you just one piece of advice to start 2023, it’s this: do not trust your dividend income to ETFs!”

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