These 8.9% Dividends Are Shockingly Cheap Following the Crash

If you’re still fearful about stocks as we pick up the pieces from the market’s grim October, let me ease your mind with one chart:

Stocks Still a Long-Term Winner

As you can see, that’s the market’s return over the last 10 years. As you can also see, stocks have returned nearly 2.5 times a person’s original investment in just a decade! Few other investments can make that claim.

The real problem? Income.

The average S&P 500 stock pays a lousy 1.9%, but let’s say you need 8% of your portfolio in monthly income to pay your bills in retirement. If you buy the popular SPDR S&P 500 ETF (SPY) and withdraw 8% monthly, you’ll be forced to sell in a falling market like the one we’ve seen. That will amplify your losses without letting you take advantage of the market’s tendency to snap back.

Fortunately, there’s a better way. You just need to buy a fund that doesn’t need to sell holdings to maintain that 8% income stream.

Sounds impossible, right? It isn’t. In fact, there’s a group of closed-end funds (CEFs) that’s designed to do just that: provide reliable income with minimal portfolio turnover, especially during moments of market weakness, where fund managers are scooping up deals left and right.

The key is to find a safe, reliable sector that provides a high income stream and doesn’t go down every time the market does. That sector exists: utilities.

In the last month, every single sector has fallen, even the supposedly safe and defensive consumer staples sector, with only one exception: utilities.

Utilities Buck the Trend

The reason for this is straightforward: with the markets (wrongly) panicking that the economy is about to take a turn for the worse, there’s a sudden thirst for reliable income, and utilities have provided that for decades.

This does mean that the Utilities SPDR ETF (XLU) and its 3.4% dividend yield are particularly compelling right now, but don’t settle for that; we can do much better with 10 CEFs that more than double up XLU’s payout.

The average income from a utility CEF right now is a whopping 8.5%, or two and a half times greater than what XLU pays. So a $100,000 investment would get you $708.33 per month in income from these CEFs, much better than the $283.33 you’d get from XLU.

Utility CEFs Deliver Big Dividends

Source: Contrarian Outlook / CEF Insider

What’s more, all but one of these funds have impressive long-term annualized returns of over 6%, with 4 delivering double-digit returns over the long haul:

Strong Returns Across the Board

In fact, 4 of these funds have beaten the S&P 500, and half of them have beaten the utilities index fund. But even that strong track record isn’t the best reason to buy these funds now.

With two (very big!) exceptions, all of these funds are priced at a discount to their net asset value (NAV), meaning you’re buying their holdings for less than their true intrinsic value. Three of these funds have double-digit discounts:

Utility CEFs Are on Sale (except for 2)

Source: Contrarian Outlook / CEF Insider

While GUT and DNP might best be avoided right now because of their high premiums, the combined big discounts and strong long-term returns with MGU, UTF, MFD and UTG make them all attractive buys. On top of that, buying these 4 funds would get you a diversified utility portfolio with a whopping 8.9% yield—even higher than the average yield for all utility CEFs.

Michael Foster has just uncovered 4 funds that tick off ALL his boxes for the perfect investment: a 7.4% average payout, steady dividend growth and 20%+ price upside. — but that won’t last long! Grab a piece of the action now, before the market comes to its senses. CLICK HERE and he’ll tell you all about his top 4 high-yield picks.

36 Reasons Why Today Could Be Marijuana’s Biggest Day in Weeks

Legal cannabis is off to a roaring start in Canada, of course, but the next flood of big-gain potential will come to us courtesy of folks south of the border.

That’s because today, voters in Colorado, Michigan, North Dakota, Utah, Missouri, Ohio, and Wisconsin will head to the polls to vote on no less than 36 major cannabis reform ballot measures.

Now, any one of these could catalyze tremendous pot-stock gains virtually overnight because, as we’ve seen time and again since 2014, “when laws pass, stocks soar.”

But I’m most excited about the biggest of them…

Change Is in the Cards Across the Country

In Ohio, voters in six cities – Dayton is the biggest one – are deciding on whether to decriminalize cannabis. If passed, these initiatives would reduce the penalty for misdemeanor marijuana offenses to the lowest penalties allowed by law.

And in Wisconsin, voters in several counties are deciding whether to legalize medical marijuana. Other counties are voting on full adult legalization.

In Colorado, one of the nation’s most important “adult use” markets, voters are deciding on an amendment that would redefine industrial hemp so it aligns with the federal definition. If it passes, Colorado farmers would be at a huge advantage – and continue to lead the country’s hemp industry. Right now, Colorado produces half of the hemp in the United States.

In Utah and Missouri, citizens will be voting on whether to legalize medical marijuana. Both these states sport deep red, profoundly anti-marijuana electorates, so these two, specifically, are monumental votes, testing exactly how mainstream legal cannabis has become.

And finally, Michigan and North Dakota voters will be deciding on adult-use recreational marijuana. The proposed laws would not only legalize the sale of certain amounts of marijuana, but also change how law enforcement prosecutes marijuana drug infractions. In some cases, the violations would be changed from criminal to civil; in others, marijuana convicts’ records would be expunged entirely.

Six of the seven states will also be voting on taxes and other legal cannabis regulations. For example, Michigan and North Dakota are looking to enact marijuana laws and taxes that would mimic those of alcohol sales.

So what does this mean for the states that are looking to legalize? Fortunately, we have a pretty good example to look at as a jumping-off point.

The Centennial State Gives Us a Road Map

When Colorado legalized marijuana, it raked in $70 million in tax revenue annually. Michigan’s population is twice the size of Colorado’s 5 million residents. So, if it follows a similar tax plan, Michigan is, in theory, looking at as much as $140 million in annual tax revenue if its ballot initiative passes.

North Dakota is also looking to go fully legal, but its population is much smaller than Colorado’s. It’s home to just 750,000 people, but even that many could generate up to $10 million in tax revenue per year.

Wisconsin, meanwhile, has roughly the same population as Colorado. So it could generate just as much tax revenue through cannabis tourism, medical marijuana, and recreational legalization.

And these numbers just reflect the beginning. Today, Colorado nets about $247 million – a 250% increase from since it went fully legal – in taxes and other fees.

If even a few of these states pass laws, they’re looking at a massive influx of cash… and that’s just in taxes, which go right to the state to help improve things like infrastructure, roads, and schools.

And these election results also will bolster the bottom line of the best cannabis firms – the sort we talk about here all the time.

That will, in turn, lead to higher share prices.

Because, again, “when laws pass, stocks soar,” and we’re looking at as many as 36 passing by the time polls close tonight.

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Source: Money Morning