CEF Smackdown: 2 Tax-Free Dividend Payers Face Off. Which Is Best?

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CEF Smackdown: 2 Tax-Free Dividend Payers Face Off. Which Is Best?

CEFs are renowned (by the few people who know about these high-income funds, of course!) for their outsized dividends—around 8%, on average, across the board as I write this.

But buying a CEF is not like buying a regular stock. When it comes to picking CEFs, we’ve got a whole bunch of different factors sitting in front of us that we need to weigh.

Sometimes CEFs Are Cheap for a Reason

There are, for example, some things that go beyond, say, past performance or discounts to net asset value (NAV, or the value of a fund’s portfolio—the main measure of a CEF’s value).… Read more

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These Tax-Free Funds Are the Biggest Dividend Secret Going

I have to admit, every year it gets harder and harder to do my taxes.

The process isn’t any more difficult—or at least if it is, my accountant isn’t saying! No, my problem is the money I end up owing.

Having to write a check to Uncle Sam for more than I earned in my first three years of working is hard to do. Which is why I’m always looking for ways to cut my taxes.

And really, the best way for me (and most likely you, too) is through a “boring” sounding investment called a municipal bond. There are three reasons why:

  1. Municipal bond, or “muni,” returns can amount to more than 9% per year for those in high tax brackets.

… Read more

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These Tax-Free Funds Are the Biggest Dividend Secret Going

I have to admit, every year it gets harder and harder to do my taxes.

The process isn’t any more difficult—or at least if it is, my accountant isn’t saying! No, my problem is the money I end up owing.

Having to write a check to Uncle Sam for more than I earned in my first three years of working is hard to do. Which is why I’m always looking for ways to cut my taxes.

And really, the best way for me (and most likely you, too) is through a “boring” sounding investment called a municipal bond. There are three reasons why:

  1. Municipal bond, or “muni,” returns can amount to more than 9% per year for those in high tax brackets.

… Read more

Read More

How to Invest Like a Billionaire (and Get 5% Tax-Free Dividends)

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 1 Investment That Boosts Your Dividends Without Boosting Your Taxes

Now that the Democrats control the House, Senate and the White House, you’re probably wondering what the new administration means for your tax bill—and your portfolio.

There’s good news here, and it comes in two parts: first, the tax hit likely won’t be as much as you think (if you notice it at all!). And second, Biden’s tax plan has quietly boosted the municipal-bond market, where there are scores of tax-free dividends waiting for us. And it’ll likely boost it even more in the months ahead.

First Up, Your Tax Bill

The takeaway is that, while there are some changes in the tax code in Biden’s latest plan, taxes will remain lower than they were when President Trump first took office.… Read more

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This 5.3% Dividend Is Really 8.4%. Here’s How.

They’re here again: more articles warning us of the “dangers” of municipal bonds. Don’t take the bait, because these wrongheaded articles will steer you away from some of the safest (and highest) dividends out there.

One claim you’ll read in many of these pieces is that states are losing tax revenue, which could mean they’re gong to default on their debt or go bankrupt. In reality, municipal-bond bankruptcies are really rare.

And I mean really rare: since 1970, the municipal-bond default rate has been 0.0043%, according to Moody’s Investor Services. To put that in perspective, the CDC says your chance of getting hit by lightning is 0.0002%.… Read more

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