This 7.6% Dividend Plays Offense and Defense in a Trade War

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This 7.6% Dividend Plays Offense and Defense in a Trade War

Trade tensions ratcheted up to 11 this week, and I know that for many readers the wild swings we’re seeing can feel sickening.

To you, I say that times like these are exactly why we hold the closed-end funds (CEFs) in our CEF Insider portfolio. Their high, steady dividends (more than 10% on average across the portfolio) let us collect our income while stocks regain their footing.

We also avoid the trap of panic selling, then seeing the story whipsaw the other way, locking in our losses (which would’ve happened if you’d hit the sell button first thing Monday morning).… Read more

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3 Funds for 8.8% Dividends and Upside Potential in Trump 2.0

With the new administration now in full swing, market events are coming our way at a furious pace.

One thing that’s clear about the next few years? Volatility is likely to tick up, especially with stock valuations stretched. Now more than ever, we need to be diversified, so we’re set up to offset any shocks to any one sector while we collect our high closed-end fund (CEF) dividends.

So that’s what we’re going to do today. And CEFs are the best tool to do it. Through just three funds (see tickers below), we’ll give ourselves access to some of the top blue-chip stocks, real estate investment trusts (REITs) and high-yield bonds out there.… Read more

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CEF Deep Dive: The One “Profit Indicator” Everyone Gets Wrong

The other day, we broke down how return of capital (ROC) can be both good and bad for investors in 8%+ yielding closed-end funds (CEFs). But in the case of high-quality CEFs, ROC is, contrary to what most people think, a good thing.

Today we’re going to look at some real-world examples to explain how, in fact, return of capital can make up a large share of a fund’s returns.

To do so, we’re going to go into five Nuveen funds, the Nuveen S&P 500 Buy-Write Income Fund (BXMX), Nuveen Dow 30 Dynamic Overwrite Fund (DIAX), Nuveen S&P 500 Dynamic Overwrite Fund (SPXX), Nuveen NASDAQ 100 Dynamic Overwrite Fund (QQQX) and Nuveen Core Equity Alpha Fund (JCE).… Read more

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No, Stocks Are NOT Overpriced (And This 6.8% Yielder Is Doubly Cheap)

The price-to-earnings (P/E) ratio has long held a lock on investors’ imaginations. So when it jumps to near 30, like it has in the last few weeks, they’re inclined to think stocks are pricey and pull back.

Now is not the time to do that.

Instead, we’re going to do what we always do at times like these: Look to a closed-end fund (CEF) that keeps us invested in stocks but gives us a hedge against a potential pullback. Three hedges, actually:

  • The sale of covered call options, which generate extra cash for the fund, supporting the dividend it pays out to us.

… Read more

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Here’s What to Buy (for Big Dividends) After Last Week’s Market Plunge

What the heck happened last Monday? I know I don’t have to tell you that the market dropped off a cliff, only to float back higher as the week continued.

The media has been saying that it was all about the latest jobs report in the US, which came out on Friday and simply wasn’t that bad—certainly not the kind of result that deserves the response we saw from stocks.

To put it in perspective, the NASDAQ 100’s fall in a single day was worse than what we saw in the pandemic, when the global economy literally shut down.

Despite the rise in the unemployment rate, joblessness is still relatively low historically speaking, companies are defaulting less than a few months ago (and at historically low levels), and the US economy is set to grow well over 2% this year, after strong growth last year.… Read more

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This Fund Yields 25.2% (Can It Be Safe?)

We’ve seen more choppiness in the markets in the last couple of weeks. That once again highlights why we should—dare I say need to—own one of the lowest-volatility, highest-paying investments I know of.

I’m talking about closed-end funds (CEFs) that sell call options on their portfolios. I know that sounds a bit out there (maybe even risky to some folks!) but it’s anything but. These terrific income plays give us exposure to stocks, like any ETF, but with less volatility and more income!

I mean, really, who doesn’t want that? Let’s dive into our options here.

Covered-Call Funds Give Us Stocks With Less Drama (and High Income)

Imagine a fund that holds all the S&P 500 stocks, but with a twist: This fund gets paid by investors who would love to buy its shares in the future.… Read more

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Inside the US Economy’s “Stealth” Boom (and an 11.4% Dividend to Play It)

There are three very clear signs the stock-market bull will keep stampeding. Let’s dive into them, then talk about two discounted funds set to ride those gains (and pay us rich dividends up to 11.4% in the process).

Bullish Signal #1: The US Worker is Strong

There’s a lot of pessimism about the US economy out there, even though it’s doing well. We’ve discussed why this is before—it’s ultimately due to the media getting more pessimistic—but this chart proves the point.

Since the Federal Reserve started tracking workers’ average weekly earnings in 2006, they’ve risen at a steady rate of about 2.6% annualized from then to 2020.… Read more

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This “Apocalyptic” News Is Our Shot at Cheap 7%+ Dividends

It’s starting again—the media has its hooks into a new story to scare investors, in yet another effort to gain attention.

The upshot is that we’ve now got a very nice opportunity to pick up a special kind of closed-end fund (CEF) that yields 7%+ and does something unusual to limit downside.

This setup reminds me just a bit of 2022, when buying fear gave contrarians bargains, and historically high dividend yields, too.

The Media-Driven “Crisis” That Doesn’t Exist

Let’s start to trace out our opportunity here by first talking about the media, which I probably don’t have to tell you is more interested in getting an emotional reaction (mainly fear and worry) out of its audience more than anything else these days.… Read more

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Why the Coming “Yield Crash” Will Send These 8%+ Payers Soaring

This market bounce is strangling the payouts on everybody’s favorite ETFs. But it’s also given us a sweet setup to grab another group of funds kicking out big payouts, to the tune of 8%+ yields.

Even better, many of these funds—wallflowers to “popular-kid” ETFs—were left off the invite list for the 2023 market party. That means they’re (still) cheap today.

I know an 8% payout has a lot of appeal to most folks, with Treasury yields now yielding around 4.3%. That’s not bad, but it doesn’t leave you much after you account for still-elevated inflation.

And if your cash is stuck in an ETF, you’re getting a lame payout, well, almost all the time, but especially if you buy now: the SPDR S&P 500 ETF Trust (SPY)—which, as the name says, holds the entire S&P 500 index—yields a sorry 1.3% as I write this.… Read more

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This Media-Driven Panic Has Put Our Favorite 7%+ Yielders on Sale

Don’t believe the media’s latest line that stocks—and by extension 7%+ yielding closed-end funds (CEFs)—are oversold.

Far from it!

Truth is, stocks—and bonds and real estate, for that matter—are still oversold as a result of the 2022 market crash.

You can see that in action in the chart below, with the benchmark ETF for the S&P 500 (in purple) up 11.1% since the start of 2022, while corporate bonds (in orange) are basically flat. And real estate investment trusts (REITs)—in blue—are still in the tank, down about 16%.

Don’t Believe the Hype: All Our Favorite Assets Are Still Cheap

Fact is, those are all low numbers, even for stocks: the S&P 500 is up an annualized 5.4% over the last two years and change since the start of 2022, which marked the beginning of the market’s swan dive.… Read more

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