Yields 14.4%, Sure, But It’s Comically Overpriced

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Who is paying a 27% premium for Guggenheim Strategic Opportunity Fund (GOF)?

Don’t get me wrong. GOF is a fine fund, delivering 9.8% yearly returns on its net asset value (NAV) since inception. But we are talking nosebleed valuation territory for GOF. It’s a dangerous purchase at these levels.

Bandwagoners buying today are unlikely to see 9.8% returns. Or anything close. Plus, they are exposing themselves to 27% downside risk because, as we’ll discuss in a minute, GOF eventually finds its way back to par.

How can a premium like this exist? GOF is a closed-end fund (CEF) with a fixed pool of shares.… Read more

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It’s no secret that corporate bonds are booming. But what might come as a surprise to some folks is that we’re not too late to get in. Through a group of well-run closed-end funds (CEFs), we can still tap big corporate-bond yields at a discount.

Even perennially gloomy Business Insider (notorious for its overdone calls for an inflation/recession-driven crash in 2022) acknowledges the terrific environment for bonds right now. Recently, BI had to admit not only that “Corporate bonds are the safest they’ve been in years,” but that this is one of the best bond markets we’ve ever seen.… Read more

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Today we’ll discuss five monthly dividends with yields between 7.3% and 16.7%. But let’s be careful—market participants are showing signs of greed right now.

Source: CNN

Monthly dividend stocks can help settle down a seasick portfolio. First, they pay every 30 days. What a concept! Their payments line up with our bills. Brilliant.

Quarterly payers aren’t as nice. Let’s look at a $500,000 portfolio split evenly among a group of five mega-cap dividend payers. This is a set of wildly popular blue chips you can find in the top 10 or top 20 holdings of just about every major large-cap fund—and despite this, they deliver a downright miserly sub-1% yield!… Read more

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It was the best of times, it was the worst of times. No, I’m not talking about Dickensian London—I’m talking about the mood among investors in our favorite high-yield investments, closed-end funds (CEFs), these days.

Those of us who know what to look for in CEFs are finding a rich hunting ground of big dividends. Yields are up—our CEF Insider portfolio yields an average of 10.2% today—and we’re in a good position to book longer-term profits due to the big discounts still available. (We can thank the cautious folks who invest in CEFs for that—they’ve been slower to buy back in after the 2022 pullback, due to alarmist media headlines.)… Read more

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The hardest part of convincing folks they can lock in high dividends for the long haul (I’m talking 9%+ yields here) is that many just don’t believe it.

And frankly, I can’t blame them. Too many people are paid a lot of money to tell investors that yields like that are impossible. But the truth is you can get a 9.5% yield today—and even more. But even at 9.5%, we’re talking about a middle-class income of $4,000 per month on an investment of just a touch over $500K.

Source: CEF Insider

Below, I’ll reveal how to start building a portfolio that could get you an even bigger income stream than this today.… Read more

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I recently got a really good question from a reader, who wondered how our current market situation compares to the 2008–2009 crash.

The short answer is that it really doesn’t. But the longer answer is much more interesting, and profitable, because it outlines the unique opportunity we now have to collect historically high dividends from my favorite income plays: closed-end funds (CEFs).

The Current State of Play for Income Investments

On cue, the current selloff has prompted the media to get on the gloom-and-doom train. As a result, we’re starting to see more fear in the markets. It’s tough to understate the impact this fear can have.… Read more

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I just read one of the best articles on personal finance I’ve ever seen.

The piece, titled “I Saved Too Much for Retirement: What I Wish I’d Done Instead,” by Martin Dasko and published on Yahoo Finance, warns of a very real danger: “If you save too much for retirement,” Dasko writes, “you could find yourself missing out on your best years, and even end up with a higher tax liability when you stop working.”

Of course, the article also says that it’s better to overprepare financially and warns of how difficult it is to retire on your own (“hire a professional!”… Read more

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We’re facing a “2016-like” moment in bonds these days, meaning anyone who buys now has a shot at locking in 10%+ dividends for decades—and a shot at price upside, too.

I mention 2016 now because, back then, something truly unusual happened: interest rates on bonds jumped in a short period of time, driving the payouts on high-yield corporate bonds to nearly 10% at their peak:

Rates Drop, Soar, Drop, Soar Again

As you can see above, anyone who bought a high-yield bond in 2016 locked in a 10% cash flow. Many of these bonds continued paying out interest without a hitch, even through the pandemic, a time when yields spiked again, giving investors another chance to buy bonds at another huge interest rate.… Read more

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Everyone hates bonds right now. Perfect—let’s buy this nifty 9.5% payer while it’s discounted!

Why the sale? A bearish narrative, of course. In 2023, we have a narrative for everything, after all.

Last week, the Bank of Japan (BOJ) announced it is softening “yield control” efforts for 10-year Japanese government bonds (JGBs). Inflation is finally picking up in Japan, and the BOJ is still printing money to buy JGBs.

Ironic? Yes. But the BOJ, the money-printing addict, is finally admitting it has a problem. We can think of this as step two of a potential multi-step inflation recovery effort.… Read more

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One mistake I’ve seen investors make time and time again is leaning too heavily on the latest “investment product” their bank is pitching them.

The problem arises because at the heart of the banking system lies a key conflict of interest: banks make money off fees and interest charged on investments, loans, credit cards and other products, so they’re motivated to get you to use those tools more.

But that usually lies at cross-purposes with our goal as income—and more specifically closed-end fund (CEF)—investors: to retire early on a high income stream (and ideally on our dividends alone), with no need for banks’ expensive loans and debts.… Read more

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