This Bond-Buying “Hack” Converts a 5% Dividends to Massive 8.3% Payouts

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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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Far too many investors ignore dividends, especially in a bull market. It’s easy to see why: with stocks racking up yearly double-digit gains, it’s tough to get worked up about a sub-2% payout (which is what most S&P 500 names pay).

But a crisis flips the script, making safe cash dividends a lot more attractive. And luckily for us, there’s one ignored corner of the market where we can grab payouts that triple what the typical stock dribbles out.

That would be in municipal bonds, or “munis,” for short. They’re a kind of debt instrument issued by local governments throughout the US.… 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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Municipal bonds are off to a slow start in 2018 – which is usually a bullish sign for these tax-free payers.

We last “pounded the table” on munis in December 2016. They were coming off their worst month since the Great Recession, and we discussed their tendency to rally when they are hated:

“It’s impossible to call a top in yields (or bottom in munis) without the benefit of hindsight. But we contrarians make our money buying when nobody else wants to – and the last time munis were this hated, they returned 30-38% over the next 12 months.”

Turns out that was the bottom in munis.…
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