With the market on the rise from its Christmastime lows, it’s natural to wonder if you’ve missed out on the rebound.

Good news: you haven’t—and today I’m going to tell you why we’re still looking at a terrific buying opportunity, even though stocks have gained more than 5% since bottoming in late December:

The Recovery Is Here

The 5.3% jump since the start of 2019 isn’t the result of fundamentals (those haven’t changed), new news (there haven’t been any significant developments) or an end to political gridlock (the shutdown has remained in effect). Instead, it’s been a clearly psychological change: with the new year, the market has a new attitude.

When it comes to short-term trends, psychology is by far the most important factor. People sell when they panic and buy when they’re greedy—which is why the contrarian, seeking long-term profits and a stable income stream, does the opposite and buys when people panic (because they’re overselling cheap assets) and sells when people are greedy (because they’re overbidding assets beyond their true value).

And that’s the biggest reason why bear markets aren’t to be feared—they’re to be embraced in a bear hug your portfolio will eventually enjoy.

Another Reason to Love the Bears

That isn’t the only reason to not fear bear markets, however. There’s one key factor you should cling to during every downturn—and take into account when you’re on the hunt for contrarian bargains: the length of a bear market.

First, the facts.

On average, bear markets have lasted 14 months from beginning to end since World War II, with the average decline being 33% from top to bottom.

However, on average, bear markets have recovered to their pre-bear-market high in an average of 14 months—meaning that the average investor who ignores short-term volatility will find that their portfolio fully recovered in about as much time as they saw it weaken.

Let’s dig deeper. Since 1945, we have had a total of nine bear markets with an average 35.8% decline among them. Also, unsurprisingly, the longer the bear market, the deeper the decline:

Note how the biggest decline of them all was the most recent: the 2007–09 Great Recession is the sort of once-in-a-lifetime event we aren’t likely to see again anytime soon. That didn’t stop many Americans from bailing on stocks during its depths, meaning they missed out on the 48 months of recovery that followed it and the 290% gains in the decade since:

Buying in ’08/’09 Led to the Ultimate Payoff

Of course, we can’t only buy stocks when they’re at their weakest—but every bear market is a clear buying opportunity, because it’ll take just about a year for the market to recover to its pre-bear-market levels—which means massive profits for people who bought when stocks were at their bear-market lows.

How Will 2018’s Bear Market Be Remembered?

My table above doesn’t include the 2018 bear market, for one reason: it isn’t over yet.

If the market continues on its uptrend, we can say that the bear market itself lasted a total of three months (really a bit less, since the market bottomed on December 24 after starting to fall on October 3).

And if we assume the same rate of recovery as we’ve seen since the market’s Christmas low, a very rough estimate would say that we’re halfway through the recovery after it lasting about a month. That would mean the total recovery time will be two months in total, shorter than the length of the downturn and far too little time in the long haul to get worked up about.

So what’s the key takeaway now? Simply this: the time to buy stocks is now—before this bear market’s short-term low prices have fully disappeared.

On that note, I want to show you …

4 Red Hot Buys for 20% GAINS (and 8%+ dividends!) in 2019

You’ll do even better if you buy the 4 closed-end funds (CEFs) I’m pounding the table on now.

Closed-end what?

Don’t worry if you’ve never heard of CEFs. Because there are only two things you really need to know about these retirement-altering cash machines:

1. These funds throw off GIANT dividends: Safe yields of 8% and up are common in the CEF space, and …
2. The selloff has knocked CEFs to ridiculously cheap levels. And because CEF investors are always slower to react to market shifts than folks who buy big-name stocks, we’ve still got a terrific opportunity to rack up BIG profits here.

How big?

Each of the 4 incredible funds I’ll show you when you click here is locked in for 20%+ in “snapback” gains in 2019 alone as their silly discounts revert to normal.

One of these picks, for example, trades at an unusually large 13% discount to net asset value (NAV, or the value of its underlying portfolio). That simply can’t last, especially when you consider that this discount was as narrow as 5% in August 2017 and has been near (and above) par many times in the past!

Don’t Let This Deal Get Away

Now is the time to buy this one—before it makes its next move higher.

Source: Contrarian Outlook

On January 1, 2018, I made my boldest prediction of the year: bitcoin was going to crash. Here’s what happened since:

Crytocurrencies Are Dying

There are lots of reasons why bitcoin has cost investors a lot of money: it’s inefficient; it’s not private; and glitches and hacking cause people to lose bitcoins. But the main reason is this: the dumb money followed the smart money—and ended up holding the bag.

I’ve seen this story play out many times, which is why I urge you to be contrarian and avoid the traps market manipulators set up, whether it was dot-com stocks in the late ’90s, housing in the mid-2000s or fantasy Internet money in the 2010s.

The other side of this coin is why I’m urging you to do one simple thing in 2019: jump into tech stocks. And if you want dividends, don’t worry. I’ve got 2 funds offering 6.3% and 9.3% payouts for you to choose from.

I’ll show you both (and reveal the one I see as the best buy now) a little further on.

My No. 1 Prediction for 2019

If there is anything you can rely on, it’s the ability of tech companies to print money, because the entire world is embracing technology to communicate, interact, trade, learn and buy new products.

The proof is in the numbers: while tech has one of the highest net profit margins of any S&P 500 sector, at 22.1%, its profits are actually growing: 100% of IT companies have reported earnings above estimates in the third quarter of 2018.

That’s right: not a single one missed!

If you looked at FAANG stocks over the last month, however, you’d get a very different impression. On average, these companies are down massively, due in no small part to the 14.5% drop from Apple (AAPL)—with only Facebook (FB) slightly above water (but it’s still down sharply for the year):

An Awful Month for Tech

Zoom out a bit, however, and the picture is much rosier. FAANG stocks are still up double digits, on average, in a year when the S&P 500 is down:

FAANG Still Outperforming

I wouldn’t be surprised if this news comes as a surprise to you. The financial press has been beating up on tech companies for a bunch of reasons—privacy scandals at Facebook and Alphabet (GOOGL), weakening subscription growth at Netflix (NFLX), the trade war for Apple—but the reality is that tech is still performing well.

But the market isn’t rewarding these stocks.

If we look at net fund flows for the Invesco QQQ Trust (QQQ), we see that $1.44 billion has left this tech-focused ETF in just the last three months. Since this is a popular ETF for tracking the Nasdaq 100, a tech-heavy index, those net outflows show the dumb money is panicking and selling off—the opposite of the setup that caused bitcoin to crash.

If we look at the Technology Select Sector SPDR ETF (XLK), things look even better for a contrarian. While hedge funds and institutional investors sometimes buy QQQ, these groups don’t use XLK quite as much. And this fund has seen billions of net outflows for 2018: a total of $2.44 billion has exited XLK in the last three months.

The conclusion is clear: the dumb money is exiting tech, which means there’s an opportunity to buy in before the pendulum swings back the other way and we see inflows.

The Tech Play

Long-time readers know one of my favorite ways to play tech is through closed-end funds CEFs), because these funds hand you generous dividends while you wait for upside—and some tech CEFs have shown serious upside over the years.

But let’s look a bit closer at four options: the two ETFs I just mentioned (XLK and QQQ) and two CEF contenders.

First, let’s look at XLK’s top 10 holdings:

Source: ALPS Portfolio Solutions Distributor

There are a lot of large cap companies in this ETF’s portfolio—household names that have been beaten up recently, but nowhere near as much as some tech stocks with smaller market caps.

Similarly, the other ETF, QQQ, sports holdings that are concentrated on many tech heavyweights, with some important differences:

Source: Invesco

PepsiCo (PEP) and Comcast Corp (CMCSA) aren’t tech companies by any stretch of the imagination (and CMCSA is arguably one of the firms being disrupted by tech upstarts), meaning this portfolio doesn’t give as much tech exposure as XLK. If we want to just invest in tech, then, we should choose XLK over QQQ—but only if we’re going to limit ourselves to ETFs.

But I wouldn’t do that, because there are two better alternatives: the CEFs I mentioned earlier.

2 Tech CEFs Paying Up to 9.3% Dividends

I’m talking about the Columbia Seligman Premium Tech Growth Fund (STK), which pays a 9.3% dividend, and the BlackRock Science and Technology Trust (BST), with a regular dividend of 6.3%. I’ve written of my appreciation for BST many times in the past; it’s up double-digits year to date, while STK is down 9%:

BST Wins Out in 2018

That doesn’t mean BST is the best choice now, though. To decide which is the better pick, we need to dig deep into each fund’s holdings.

Let’s start with BST, which recently made an aggressive bet on payments companies. That’s part of the reason why it’s been strong lately, as bitcoin failed to replace the payments solutions of BST’s major holdings, such as Square (SQ) and Visa (V). But this fund also has a lot of exposure to China:

BST Looks to China …

Source: BlackRock

In total, nearly 10% of the fund is based in China and focused on China-oriented companies. This is fundamentally different from STK, which is much more US focused, while also investing in hardware and payments:

… While STK Focuses on the US 

Source: Columbia Management

STK’s portfolio is why I’ve favored BST throughout 2018: the cryptocurrency mania resulted in intense demand for hardware, but the crash in crypto also means that demand has evaporated in 2018.

As a result, chipmakers and similar firms have struggled, causing the semiconductor sector (seen below through the VanEck Vectors ETF [SMH]) to buckle in 2018:

Semiconductors Fall

But now cryptocurrencies are no longer a factor in semiconductor companies’ performance—and that’s a benefit, not a liability. It’s also why now is the time to favor STK and put some money into this fund if you’re on the hunt for tech exposure.

The kicker? Its 9.3% dividend yield is an enticing income stream while you wait for the market to come to its senses and lift the semiconductor sector back to the valuations it deserves.

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.

Source: Contrarian Outlook

Today I’m going to show you why this market isn’t as spooked as you might think. Then I’m going to reveal the 1 sector (and 1 fund boasting an incredible 8.7% dividend yield) that’s a screaming bargain now.

Let’s start with the state of play as I write this.

Here’s a question: of the 11 sectors that make up the S&P 500, how many do you think are negative for 2018?

If you said more than 5, the pessimism of the financial press has tainted your worldview. Take a look at this table:

5 in the Red, 5 in the Green

A close look at the 11 sectors of the S&P 500 is crucial, because we quickly see that 5 sectors are green, 5 are down and 1 is flat for 2018. While the red sectors are down big (financials energy, and materials have all dropped more than 10%), solid returns in tech, healthcare and utilities tell us most regular investors haven’t hit the panic button.

Let me explain.

Remember that there are “risk-on” and “risk-off” sectors. If investors are really worried about a big downturn, they go head-first into the “safe” and usually countercyclical consumer-staples sector—but the Consumer Staples SPDR ETF (XLP) is down 3.8% on the year, and the cyclical Consumer Discretionary SPDR ETF (XLY) is up 4.8%.

There’s a simple reason for that: everyday Americans are buying more because they’re earning more and getting jobs more easily. Therefore, it makes no sense in such an environment to run away from so-called risky assets, because those assets are the ones bagging higher revenues and earnings.

Likewise, tech and healthcare are typically high-risk sectors, with higher P/E ratios, that get sold off when a major market downturn is supposedly around the corner. But the Health Care SPDR ETF (XLV) is up nearly 10%, and tech’s 2.4% gain is after the heavy selloff of Apple (AAPL), on trade-war fears.

The lesson is obvious: while some sectors are suffering a short-term downturn, others are fine, thanks to economic growth of 3% and earnings growth of more than 20%. But the big financial media’s cavalier attitude toward the details has resulted in a lot of news about a market panic that simply isn’t there.

What About the Losers?

Before we get to one of my favorite sectors for 2019 (and that 8.7% yielder I mentioned earlier), let me quickly touch on a couple particularly beaten-down corners of the market. No, we’re not going to bottom-fish here—but these sectors’ misery has a key role to play in the nice price pop (and income) our pick is poised to hand us in the months ahead.

The first is materials, which saw earnings growth fall sharply, to 10%, in the third quarter, largely due to sluggish commodity prices across the sector, which lowers their pricing power because materials companies can’t increase prices of the commodities they sell to factories and property developers. That’s weighed down materials stocks—but it’s been a boon to the sector (and fund) we’ll discuss in a moment.

The other is energy, which has has been hit hard by the fall in oil. Just look at the price action with the Energy Select Sector SPDR (XLE) and WTI oil futures:

Low Oil and Lower Energy Stocks

While that’s bruising for the sector, it’s great for an economy like America’s, where energy demand from consumers and manufacturers is the main engine of growth. So XLE’s 12.7% loss should be seen as the rest of the economy’s gain.

What to Buy Now

That brings me to the sector I want to dive into today: real estate.

It’s a direct beneficiary of lower costs for energy and materials, because both lower property builders’ expenses, resulting in greater inventories for real estate investors and higher profits for real estate developers.

Secondly, the real estate sector has been brutalized because of fears of higher interest rates—fears that are proving to be wrong.

Rate Burden Gets Lighter

Over the last 3 years, the return on the Real Estate Select Sector SPDR (XLRE) has been less than half that of the broader market, for one reason: higher interest rates. Almost 3 years ago to the day, the Federal Reserve kicked off the current rate-hike cycle, and the real estate market freaked out (see the dip in the orange line in early 2016). It has only slightly recovered since—with several “mini-freakouts” along the way.

On Sale Now: An 8.7% Dividend With Upside

Now that rates are set to rise more slowly than previously expected, real estate is a particularly appealing “sleeper” sector, because the market still hasn’t gotten the message. You can compound your returns through a closed-end fund (CEF) like the Nuveen Real Estate Income Fund (JRS).

JRS invests in many companies that make up XLRE, but there’s one huge difference: JRS trades at a 10.2% discountto the market value of the companies it owns, while XLRE trades at the whole market value of its portfolio. So you can get this already very cheap sector at a discount!

Another great thing about JRS? Its income. With an 8.7% dividend yield, this fund trounces the still-impressive 3.6% dividend XLRE provides. So you’ll be pocketing a hefty income stream while you wait for the real estate market to come to its senses.

5 More “Must-Buy” 8%+ Dividends for 2019

Here’s the thing about 8.7% payouts like these: the pundits will tell you they’re unsafe, but that’s nonsense!

The truth is, dividends like these are absolutely necessary if you want to achieve the “retirement holy grail”: clocking out and living on dividends alone. Because when your dividends cover your bills (and then some!) and roll in like clockwork, who cares what Mr. Market gets up to on a day-to-day basis?

This is how everyone should approach retirement investing. And the good news is that there are plenty of CEFs—like JRS—throwing off rock-solid 8%+ payouts that will get you there.

But where do you start? Easy: with the 5 hidden gems (including one CEF paying an incredible 9% dividend) I’ll reveal when you click right here.

And before you ask, no, you won’t give up a cent of upside to get your hands on the 8% average payouts these 5 funds deliver. Take a look at how one of these buys—pick No. 3, to be exact—has manhandled the market since inception:

Market-Crushing Gains and 8.7% Dividends—in 1 Buy!

Source: Contrarian Outlook

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.

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.

With the stock market collapsing 6% from its all-time high in just two weeks, a lot of people are freaking out.

Don’t follow them!

Because now is the best time to buy we’ve seen in a long time.

Before I show you my top 3 “buy now” indicators—which are all blaring green—and a bargain 7.5%-yielder to jump on now, let me first say that we’ve been here before.

In mid-February, with the market again on its back, I urged readers not to panic. This has happened since:

A Quick Recovery

While a 1.6% total return in 8 months isn’t much to write home about, it’s not the massive loss a lot of investors are terrified of today. Plus, an 8-month period is so short to be almost meaningless. Check out how investors who bought during the big correction in early 2016 have done:

You Can Choose Contrarian Outperformance …

But if you’d waited until the market started recovering fully in April 2016, you’d have a far smaller return:

… Or Diminished Profits

We are now in a similar position with stocks. But given the wild swings we’ve seen in the last few weeks, I understand if you’re still skeptical. That’s why I’ve written up the 3 rock-solid “buy now” indicators I’ll show you next.

Buy Indicator No. 1: Third Quarter Profits Are Soaring

In both the first and second quarters of this year, S&P 500 firms reported earnings that demolished expectations and delivered record growth.

That trend isn’t stopping.

While it’s early for third-quarter reports, so far the news is good. Net profit margins across the S&P 500 are 11.6%, which is where they were in the first quarter. That’s far ahead of what we’ve seen in the last 5 years:

Q3 Brings “Levitating” Profits

When all is said and done, analysts expect 19.2% earnings growth on a year-over-year basis for the third quarter, which is miles ahead of the 3.5% annualized growth in the last decade. It also means stocks are the cheapest in years—the S&P 500’s forward P/E ratio is at 15.7, way below its historical average:

Stocks Getting Cheap

With higher earnings and lower stock prices, this is a rare buying opportunity.

Buy Indicator No. 2: Fatter Paychecks, Higher Spending

The good news isn’t just limited to companies—that would be a bad thing! Average Americans are doing better, too.

Since March of this year, average weekly earnings have risen more than 3%, the fastest growth since 2010. The trend has lasted longer this time than back then, when we saw wages rise above 3% for just 2 months in a 5-month period.

Salaries Swell, Retailers Rejoice

Note that the line is both staying above 3% and is in an uptrend. That rise has broken a resistance level wages saw throughout 2014 and most of 2017:

Wage Gains Break Out

The wage news is incredibly good and keeps getting better. When Americans have more money in their pockets, they go shopping. That’s helped corporate revenue: all told, S&P 500 companies’ sales are up nearly 5%, the highest year-over-year growth in nearly a decade.

Buy Indicator No. 3: Hitting “Snooze” on the Recession Alarm

The final good piece of news is something I covered in-depth in my October 15 article.

Earlier in 2018, many financial analysts and journalists fretted that the flattening trend in the yield curve (or the spread between the yields on the 2-year and 10-year Treasury notes) would usher in a recession in the next year or so. This was reasonable: an inverted yield curve has preceded every modern recession on record.

But the trend toward a flatter yield curve suddenly stopped in September:

A Dangerous Sign Fades Away

This remains one of the greatest indicators of financial health in the United States, so we need to keep a close eye on it. But for now, the odds of a 2019 recession are vanishing.

1 Fund (Paying 7.5% in Cash) to Buy Now

If the economy is booming and earnings are still rising, now may be the worst time to sell—especially since everyone else is. So you could buy the S&P 500 ETF (SPY) and get a strong return over the next few months.

But you could get a stronger return with a fund like the John Hancock Tax Advantaged Dividend Income Fund (HTD).

Why? For one, HTD has crushed the S&P 500, despite its focus on large-cap value companies:

Dusting the Benchmark

With a 405% total return in the last decade versus 274% for the S&P 500 index fund, HTD has a proven track record. And it notches gains like that while delivering a 7.5% dividend, giving us a serious income stream we can use however we like.

The market hasn’t rewarded HTD, however; despite its solid track record, the fund trades at a 7.9% discount to net asset value (NAV, or what it’s underlying portfolio is worth), far lower than where it traded in late 2017:

HTD Goes on Sale

When the market recovers, I expect HTD’s NAV to rise, helping it deliver capital gains.

But I also think other investors will realize HTD’s solid performance when its NAV rises, causing more bidding pressure to result in a smaller discount, compounding HTD’s return. Investors who buy now can enjoy the fund’s 7.5% dividend while they wait for that to happen.

Your Best Selloff Buy Now: 8.4% Dividends and Big 2019 Gains

Here’s something else I need to tell you: the selloff knocked one of my top 4 CEF buys to an amazing 14% discount to NAV!

In plain English, that means we’re getting this standout fund’s portfolio—top-notch high yielders like Ventas (VTR) and Enbridge (ENB)—for just 86 cents on the dollar!

This bargain fund then takes these stocks’ massive dividends (plus the upside its veteran managers squeeze from its rock-solid portfolio) and hands them to you in the form of a huge 8.4% dividend paid monthly!

Your Monthly “Paychecks” Await

This is the perfect investment for today’s churned-up markets. Because thanks to this fund’s huge discount, my team and I have it pegged for easy 20% price upside in 2019.

And that’s on top of its incredible 8.4% CASH dividend!

Plus, you get some invaluable downside protection, because even if we get hit with an unexpected market collapse, we’re still covered: thanks to this fund’s big markdown, it will just trade flat—and we’ll still pocket its massive 8.4% payout!Please don't make this huge dividend mistake... If you are currently investing in dividend stocks – or even if you think you MIGHT invest in any dividend stocks over the next several months – then please take a few minutes to read this urgent new report. Not only could it prevent you from making a huge mistake related to income investing, it could also help you earn 12% a year from here on out! Click here to get the full story right away. 

Something strange is happening in the investment-bank and hedge-fund world: a growing sense that the next recession (which, by the way, Wall Street has long been wrongly predicting for years) finally has a due date: 2020.

The number of Wall Street firms predicting this date is staggering.

Bloomberg’s Joe Wisenthal has collected a few predictions, such as one from Moody’s Analytics chief economist Mark Zandi, who said 2020 will be the economic “inflection point,” and Société Générale’s economic team, who said the likelihood of a 2020 recession has risen due to, among other things, a tight labor market and higher borrowing costs.

Even former Federal Reserve Chairman Ben Bernanke is getting in on the act, saying a boom “is going to hit the economy in a big way this year and next year. Then in 2020, Wile E. Coyote is going to go off the cliff.”

Doom and Gloom = Cheap 7%+ Dividends for You

This all sounds scary, but the stock market doesn’t care—it’s been too busy surging to new highs:

What, Me Worry?

Stocks’ 10% year-to-date gain means that, if this trend continues, we’ll see a 13% total return for the S&P 500 for all of 2018. That’s far from the kind of market Wall Street seems to be panicking about.

So let’s dig into the fears behind this gloom and doom, and why there’s nothing to fear at all. Then I’ll show you 2 funds you can buy now that will get you all that is best about this still-strong US economy.

And when I say “best,” I’m talking huge dividends up to 10%, and long-term performance that tops the market’s return, too.

But first, let’s dive into 3 fears that are driving the market today, so we can see what’s setting up the 2-fund opportunity I’ll show you toward the end of this article.

Hysterical Fear No. 1: An Inverted Yield Curve

By far, the biggest panic of 2018 has been over the yield curve.

When the difference between the yield on the 2-year US Treasury and the 10-year US Treasury goes negative for longer than a few days, America falls into recession. This is pretty much clockwork: it’s happened every time for decades, making this the most reliable recession indicator.

And the yield curve—that is, the difference between these two yields—has been narrowing since February 2018, when the market’s last major sell off hit:

A Worrying Indicator?

Note, however, that the fast decline from February to July has abated, and we are now about where we were in July.

This doesn’t mean an inverted yield curve isn’t coming (it still looks likely), but it isn’t coming yet. And since a recession typically happens about 12 to 18 months after the inverted yield curve appears, we still have plenty of time to tap the market’s rising gains (and dividends), starting with the 2 funds below.

Hysterical Fear No. 2: Declining Profits

The second fear is so silly it almost isn’t worth taking seriously—until you realize a close look at this fear shows just how wise it is to buy stocks now.

And that worry is that corporate profits are perfectly positioned to start falling.

That sounds bad—until you look into why they are so well positioned to fall: because they’re so absurdly strong right now.

Let me quote FactSet: a “record-high percentage of S&P 500 companies beat EPS estimates for Q2.” That sounds good—and then when you realize just how high expectations were, you realize this isn’t just good, it’s amazing.

Despite expectations of 23% earnings growth (itself higher than the first quarter’s 20% rise), the market reported 25% growth. A staggering 80% of companies beat expectations—far beyond the former record holder, the first quarter of 2018.

Earnings Crush (High) Expectations

Here’s the Chicken Little logic: with earnings growth this high, how can it possibly get any higher?

Of course, this is an old fear we saw in the third quarter of 2014, when oil prices were crashing and pundits warned that a 2008-style disaster was about to unfold. Here’s what the market has done since then:

62% Gains in Just 4 Years

The bottom line? If you sell into today’s fears, expect to miss out on gains like these.

Hysterical Fear No. 3: Tariffs, Tax Cuts and Trump

The 3 “Ts” that are driving many financial fears are largely political, with a lot of attention honing in on two moves by Donald Trump.

The first move was the 2017 tax cuts that many economists have said could overheat the economy. The second, and more alarmist, fear is that Trump’s tariffs, specifically those aimed at China, will result in a trade war that kills US exports.

The trade-war fears largely drove the market correction in February, but there’s just one problem: the tariffs are too small to matter. Even at their recent expansion to $250 billion in imports, tariffs on Chinese goods represent about 1% of America’s economy. And those tariffs are effectively a tax of about 13% of those $250 billion—meaning the actual impact on the US economy is about 0.17% of GDP.

These are microscopic numbers. Yes, they could increase—but until they do, the drag on the economy from tariffs is too small to matter, meaning it’s too early to respond from an investment point of view, no matter what your politics may be.

The Right Response

Still, these fears feel like they warrant some type of response, so what should it be?

Simple! As canny contrarians, we’re going to pounce on these overdone worries and buy stocks now.

But what’s the best way to do it?

If you choose to buy stocks individually, you’ll need to invest a lot of time and/or money in research. Pick a low-cost index fund like the SPDR S&P 500 ETF (SPY) and you’ll likely enjoy a strong return. But that return will, by definition, be mediocre, because SPY doesn’t try to pick winners or losers. Plus, SPY’s dividend yield is a joke at 1.7%.

Then there’s the path less traveled: high-yield closed-end funds (CEFs) that invest in many S&P 500 stocks and offer a shot at better price gains, along with a higher income stream (and not just a little higher: payouts of 7% and more are common in CEF land).

2 Funds Set for Big Gains (and Dividends) as Wall Street Frets

Our first pick is the Nuveen S&P 500 Dynamic Overwrite Fund (SPXX), which provides a mix of equity exposure and insurance on a big market slide to provide returns, because this fund uses call options (a kind of insurance against stock exposure) to limit downside risk.

It also boasts an outsized 6.7% income stream that’s nearly 4 times the S&P 500’s average yield. Plus, SPXX has closely tracked the market in terms of overall performance while providing that bigger income stream:

SPXX Hands You Your Win in Cash

Or you could snap up the Liberty All-Star Equity Fund (USA) and its incredible 10% dividend yield, as well as its portfolio of mid-cap and large-cap US stocks. This one has actually beaten the “dumb” index fund over the last decade, too:

A Massive Return Over the Long Haul

Whatever path you take, it’s pretty clear that now is not the time to panic—even as we keep our eyes peeled for whatever 2020 may bring!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.

Readers often ask me how to build a portfolio that holds its own in down times but hands them more income than the measly 2.6% long-term US Treasuries pay.

So today I’ll show you how to do that. With the 4 bargain-priced closed-end funds (CEFs) I’ll show you below, which also boast strong track records and high income streams, you can keep the dividends flowing, regardless of the market’s tantrums.

An added plus? Your nest egg will be spread across asset classes, giving you extra protection.

Buy No. 1: A Buffett-Friendly CEF With Big Upside

With a long-term average total return of around 8.5% per year, US stocks need to be at the heart of any income portfolio. And the beauty of closed-end funds (CEFs) is that you can get a return like that, along with a large cash stream you can reinvest or use to pay your bills.

Start with the Boulder Growth & Income Fund (BIF), which trades at a 15.3% discount to net asset value (NAV, or the value of its underlying portfolio), despite its large exposure to Warren Buffett’s Berkshire Hathaway (BRK) and several other high-quality value and growth companies. That exposure has resulted in BIF’s NAV doing this in the last 3 years:

A Strong and Steady Return

Another great thing about BIF is that, thanks to its value-investing principles, it can bounce back from a recession faster than the S&P 500, as we saw in 2007-09:

A Quick, Sustained Recovery

And since BIF gives you a 3.7% dividend stream, versus the 0% Berkshire pays, you can harness the power of value investing without sacrificing income with this fund.

Buy No. 2: Big Yields From Safe Utilities

But let’s go for even more income and security with the 6.3%-yielding Gabelli Global Utility & Income Trust (GLU), which has a massive 9.7% discount to NAV that has opened up only in the last 6 months:

A Buy Window Opens

This has created a buying opportunity for a fund that hasn’t cut its dividend since its IPO over a decade ago—something only a select few CEFs can say.

The result? Steady income through thick and thin, with limited downside, thanks to GLU’s huge discount. That should make income investors happy no matter what the economy does.

Buy No. 3: Muni Bonds for Low-Stress, Tax-Free Dividends

Municipal bonds are a great way to get a large income stream no matter the economic climate, because they have a government guarantee and one of the lowest default rates in the world—less than 0.01%!

A big problem with many muni CEFs, however, is that they each tend to focus on one state, and bad news hitting that state can hit these funds’ values quickly, even if the fund’s fundamentals remain strong.

That’s why a nationally diversified and deeply discounted fund, like the DTF Tax-Free Income Fund (DTF), makes sense for our 4-fund portfolio. This fund doesn’t have more than 15% of its assets in any one state, and its top holdings (issues by Florida and California) are from states seeing rising population growth and higher per-capita income, resulting in improving budget conditions:

Source: Duff & Phelps Investment Management Company

That diversified portfolio helps secure the fund’s 4.5% dividend yield, which is tax-free at the federal and state levels for many Americans.

Plus, DTF’s strong management team has driven the fund to far outperform the muni-bond index fund, the iShares National Municipal Bond ETF (MUB), which so many investors depend on, despite its pathetic 2.4% dividend yield:

Beating the Index by a Wide Margin

DTF’s outperformance and strong income stream should come at a premium; instead, the fund trades at a 12.3% discount to NAV! That’s far below its 6.7% average discount over the last decade, and it makes DTF a great, safe buy for muni exposure. And since it has over 150 issues from 32 states, this fund alone gets you the diversification you need.

“Instant Portfolio” Buy No. 4: 7.4% Dividends From Quality Corporate Bonds

Finally, let’s round out our portfolio with corporate bonds for reliable income. We can do that with the Western Asset Global Corporate Defined Opportunities Fund (GDO). With an 8.7% discount to NAV and a 7.4% dividend yield, this is a rare treat for an income lover—especially since it’s been crushing the index fund for nearly a decade. (See a pattern here? Index-busting CEFs are everywhere.)

Trouncing the Index Again

GDO’s recent price slide handed us that nice discount (it was trading at a 5.5% discount at the start of 2018). That markdown also means the fund’s dividend will be more sustainable going forward, because while the yield on its share price is 7.4%, the yield on its underlying NAV is a significantly lower 6.8%.

That’s a significantly lower figure, and it’s the one that really matters when it comes to dividend reliability. So we can look forward to enjoying GDO’s outsized dividend stream and some nice price upside here, to boot.

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Each of these 16 all-stars is poised for fast double-digit gains. PLUS they throw off SAFE yields up to 9.66%!

That upside and dividend income top anything you’ll see from the 4 picks I just showed you. Plus, these 16 incredible funds give you even more diversification (and safety), because they hold everything from US stocks to real estate investment trusts (REITs), floating-rate bonds and preferred shares.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.

There’s been a massive discount building in a pocket of the market where you can get big dividends that are entirely tax-free.

And I’m going to show you three “1-click” ways to tap this income investor’s wonderland today.

I know that tax-free anything these days sounds impossible, but in this case, I assure you it’s not. The key is investing in municipal bonds, which give you a passive income stream that is entirely tax exempt at the federal level. Plus it’s also exempt from state taxes in many situations, too.

That means a 4%-yielding municipal bond, or “muni,” is more like a 5.3%-yielding dividend stock for a family earning $100,000 per year—and that’s before we factor in state taxes.

Plus, there are some funds out there that hold munis that can get you much more than 4%. Below I’ll show you 3 of them with “regular” yields as high as 5.8%. First, let me tell you why now is the perfect time to buy them.

How to Amplify Your Muni Gains (and Dividends)

To get the biggest bang for your buck in munis, buy them through closed-end funds (CEFs). There are nearly 200 muni-bond CEFs out there, and most of them yield over 4%. And since they’re CEFs, several are priced far below their “true” value.

How can you tell?

Because the average municipal-bond CEF’s market price is 8.6% below its net asset value (NAV, or the market value of all the holdings in its portfolio).

That discount to NAV is a key number to watch in any CEF, and with a wide 8.6% average markdown, it’s easy to snap up a great muni-bond CEF cheap, then set yourself up for some nice price upside as that gap narrows to its traditional level.

Muni CEF Pick #1: A 4.9% Yield at a Massive Discount

A good example of a great marked-down fund is the Eaton Vance New Jersey Municipal Income Fund (EVJ), which pays a 4.9% dividend and currently trades at a massive 12.3% discount to NAV.

EVJ is no slouch in the performance department, either. On a NAV basis, the fund has earned an 11.5% return over the last 3 years, which is nearly double the gain posted by the muni-bond index fund, the iShares National Muni Bond ETF (MUB).

EVJ Demolishes the Benchmark

On top of that outperformance, EVJ’s yield is about twice that of MUB, making it both a market outperformer and a big yielder.

But should you worry that the fund focuses on just one state? In a word, no.

New Jersey’s average income is $62,554 per capita, the third highest in the union. And while the state’s GDP grew more slowly than that of America as a whole in 2017 (0.9% versus 2.1%), New Jersey is the eighth-wealthiest state in America, which means its growth rate will tend to be lower than those of poorer states.

That wealth has also resulted in fast-growing investment in infrastructure (this spending is budgeted to rise 172% in the next year), which tends to boost economic growth.

But here’s the real key: New Jersey revenues are set to rise 5.7% in 2019 after gaining in 2018. That 2019 estimate is far higher than the 4.2% growth in the state’s spending, so the bottom line here is that New Jersey’s fiscal health is getting better. And that makes EVJ worth considering for income and growth now.

Muni CEF Pick #2: Unbeatable Safety and 4.1% in Tax-Free Cash

Nonetheless, if you do want to go beyond a fund that focuses on just one state, you’d be smart to snap up the BlackRock Municipal Intermediate Duration Fund (MUI), one of the best-performing muni CEFs over the last decade. Just look at how it’s done compared to MUB:

MUI Quietly Delivers Big Profits

This outperformance isn’t rewarded with a premium price; MUI trades at a 13% discount to NAV, which is double its 6.5% average markdown over the last decade. That also means the fund’s 4.1% dividend yield is extremely sustainable, since MUI’s management only needs to get a 3.6% income stream in the muni-bond markets to keep the payouts coming.

Then there’s the diversification. Here’s a chart from BlackRock breaking down the fund’s exposure by state—you can see that it focuses on the biggest states with the healthiest budgets:

A Diverse Fund

Plus, MUI is exposed to the northeast, southwest and every area in between—the fund actually holds municipal bonds from 44 states in total!

If you’re looking for a sleep-well-at-night, high-yielding, tax-free income stream, MUI is a great option.

Muni CEF Pick #3: Crushing the Index for Over 2 Decades

The last fund I want to show you is another BlackRock fund, the BlackRock MuniHoldings Fund II (MUH), which is one of the best-performing muni CEFs of all time. Over the last decade, it’s returned 7.5% annualized. Just look at what it’s done compared to MUB!

Another Long-Term Winner

What’s the secret to this fund’s success?

Two things. First, it invests in municipal bonds that are income tax free but not alternative minimum tax (AMT) free. That limits the appeal of these bonds to some investors, making the market for them less efficient. That, in turn, lets the geniuses at BlackRock easily spot bargains that will boost your returns (as management has for the last decade).

Another big reason for MUH’s healthy gains is the fund’s use of derivatives. By using a mixture of futures, options and interest-rate swaps, MUH can boost your total return by actively playing the bond market as it relates to the Federal Reserve’s changing monetary policy. This approach has worked well over the fund’s history, going back to the 1990s.

Finally, MUH trades at a 7.6% discount to NAV, far higher than the 3.4% markdown it’s averaged over the last decade. That discount has gotten unusually big in the last year—but it’s also starting to recover:

Sale Ending Soon

That makes a good time to consider moving into MUH. You’ll collect a nice 5.8% income stream while you wait for its discount to close.

Beyond Munis: 4 Buys for 7.8% CASH Payouts and 20%+ Upside

As I mentioned earlier, a CEF’s discount to NAV is an incredibly reliable indicator that it’s poised to deliver serious price upside.

That’s true of the 3 funds I just showed you … and it goes double for the 4 other CEFs I want to show you now. Each one trades at an even more absurd discount to NAV than our 3 muni funds … so these 4 unsung funds are spring-loaded to catapult us to price gains of 20%+ in the next 12 months.

When you combine these 4 buys with our muni-fund CEFs, you get an “instant” portfolio that lets you dip a toe in some of the best income investments in the world: munis, high-yield REITs, preferred stocks, corporate bonds and dividend stocks, to name a few.

PLUS, these 4 amazing income plays also pay dividends 3 or 4 TIMES higher than your typical stock—up to 8.0%! So you’re getting paid very handsomely while you wait for these funds’ discount windows to slam shut.

Here’s a quick look at each of them:

• The real estate mogul: This fund has DOUBLED the market’s return since inception—including during the financial crisis—by investing in real estate, the very thing that caused the meltdown in the first place! It pays you 7.8% in cash today, and its silly discount points to a shockingly big price rise ahead.
• The bond play with a fat 7.2% payout: This one trades at a totally unusual 14.9% discount to NAV. And it has something I love in a CEF: management with skin in the game. The team at the top includes a Wall Street vet with $250,000 of his own cash in the fund, so you can bet he’ll be working for you.
• The perfect buy for rising rates: This one holds floating-rate loans, whose rates adjust higher with interest rates. If you want to hedge your portfolio against the Fed’s next move (and collect 6.4% in cash while you do) this fund is for you.
• The preferred-stock player: Preferred stocks trade around a par value, like a bond, but pay outsized dividends, fueling this fund’s amazing 6.9% payout. Better yet, preferreds have gone on sale in the last few months, driving this fund to a rare discount—and giving us our in.

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.

Source: Contrarian Outlook