I’m going to show you my favorite (perfectly legal) way to pay 0% tax on your dividend income.

To show you the big savings this could mean, let’s look at two fictional investors who are nearing retirement: Jane and Janet.

We’ll assume both are single, are earning $50,000 per year and live in a state with no income taxes. Now let’s assume Janet has taken the so-called “right” path, as suggested by her financial advisor, while Jane has steered her own course. A quick look at both will show how that “right” path can create a hefty tax problem.

Let’s say Janet put a million dollars in the Vanguard S&P 500 ETF (VOO) because she’s been told that a low-cost index fund is best for retirement. VOO is giving her $14,100 in annual dividends as a result, but because Janet is still working, she’ll have to give Uncle Sam $1,864 in taxes on her dividends for just one year—and that doesn’t include tax she’ll pay when she eventually sells her shares.

Over to Jane. Instead of following the herd and buying VOO, she’s put her million in a lesser-known fund called the Nuveen Municipal High Income Opportunity Fund (NMZ), which pays a 5% dividend yield, giving her an income stream of $50,000 from her investment. Not only is her nest egg now entirely replacing her work income, but she’s also getting all of it.

That’s right. Of that $50,000 a year NMZ is giving Jane, zero is going to Uncle Sam. And it doesn’t matter if she gets a promotion at work and makes more, or if NMZ starts paying her more (which it did for its shareholders at the start of the year; more on that later).

She will not have to pay any of her income from this fund to the tax man.

Of course, the more Janet gets paid, the more taxes she’ll have to pay out. If her work pay rises 20%, for instance, the tax on her dividends will climb to $2,115 per year, meaning her tax burden has gone up by almost as much as her raise!

Municipal Bonds: Your Tax-Free Income Option

Municipal bonds, the investments NMZ holds, are popular because they’re one of the few ways Americans can legally get paid without having to pay taxes. It’s all thanks to a 1913 law exempting municipal bonds from federal income tax. Since then, investors have been using “muni” bonds to generate a high income stream—and keep all of it.

Dispelling the Biggest Muni Myth

How popular are muni bonds? Right now, the market is worth nearly $4 trillion in the US, which is about 13% of the size of the total stock market. Considering municipalities aren’t in the business of making a profit, it’s surprising that muni bonds are as big as they are.

While many muni bonds are gobbled up by wealthy investors looking to cut out the tax man, the middle class often ignores them. One reason why is fear: headlines about municipalities going bankrupt and leaving investors in the cold result in paranoia—and many bad investment decisions.

Here are the facts: according to Moody’s, the total default rate of muni bonds since 1970 is 0.09%. In other words, for every 10,000 muni bonds issued, nine go into default. Put another way, you’re 1,442 times more likely to get in a car crash than to hold a muni bond that defaults.

The Power of Diversification

Here’s another crucial point: when a municipality defaults, it doesn’t mean investors get nothing. In reality, municipalities will restructure their debts on new terms, which could mean a small loss for bondholders. But one way to limit this risk even further is to hold a fund like NMZ.

With $1.5 billion in assets, NMZ can diversify across many bonds (it currently holds 598 of them) to slash the risk of being exposed to a default.

This doesn’t just make NMZ safer, it’s also made the fund’s returns impressive. Thanks to NMZ’s unique market access and expertise, it’s crushed a muni-bond index fund like the iShares National Muni Bond ETF (MUB), in orange below.

The Power of Diversification—and Expert Management

It’s rare to get superior returns and greater safety, but NMZ delivers both.

Finally, a Word on Rates

There’s one last reason why Jane would be smart to buy NMZ: the Federal Reserve.

In 2019, the Fed cut interest rates three times, which has had two effects on muni bonds. The first is that they’re more attractive to investors than before. From 2015 to the start of 2019, when the Fed was raising interest rates, muni bonds were struggling to make headway, as you can see in the chart below:

Rising Rates a Drag on Munis—Until 2019

There are two reasons why munis stalled in this period: first, many investors thought they could get higher income streams elsewhere as rates rose. Second, and more important, bonds fall in value as interest rates go up, which meant the resale value of these bonds dropped with the Fed’s aggressive rate-hike cycle.

Fortunately, the opposite is also true: lower rates mean muni bonds go up, which is why you see that huge hockey stick at the end of the chart above. It’s also why NMZ raised its dividend earlier in 2019, and why it may raise it again. The Fed’s aggressive rate cuts have been a blessing for munis this year, and with the central bank likely to continue lowering rates, that hockey stick will get bigger.

5 Huge 8.8% Dividends That Fit Perfectly With NMZ

NMZ is just the start: now, I want to give you 4 more funds that hand you a much bigger dividend payout—I’m talking a blockbuster 8.8% average yield.

PLUS, these funds are so cheap now, they’re “spring-loaded” for 20%+ price upside in 2020.

So if, say, you invested $400K in this diversified collection of income powerhouses, you’d be looking at $35,200 in dividend cash by November 2020—and $80,000 in price gains too!

But these 4 income plays won’t be cheap for long—especially with the Fed determined to keep cutting rates, which will drive more income-starved investors into the CEF market.

When I show people how closed-end funds (CEFs) can hand them safe 7% yields and let them retire on much less than a million bucks, they often say one thing:

“Why the heck hasn’t my financial advisor told me any of this?” 

The reasons are both simple and surprising: 1) Many financial advisors don’t fully understand how CEFs work, and 2) Some CEFs involve a bit of research, so for a lot of advisors it’s easier to recommend low-cost index funds and call it a day.

Both of these (unacceptable) reasons are costing folks millions in profits!

So today we’re going to demystify CEFs by zeroing in on a fund that’s crushed the market for nearly two decades. In fact, since its IPO in 2002, the PIMCO Corporate & Income Opportunities Fund (PTY) has given investors double the S&P 500’s return.

The Power of a Top-Notch CEF

A lot of advisors dismiss funds that beat the S&P 500 in a year or two as simply lucky—but that doesn’t explain PTY’s 777% return in 17 years. And a deeper look tells us a lot about CEFs and how we can harness them to retire earlier and lock in a massive income stream that too many pros say is unattainable.

How to Buy a 777% Winner (With an 8.6% Dividend) on the Cheap

Since its inception, PTY has returned 13.6% annualized on its market price, while the S&P 500 has returned 9.3%. This outperformance is due to one factor: the fund’s inherent return, despite the market’s lower valuation of PTY.

Let me explain the difference. If we look at the value of the portfolio of assets PTY holds, we see that this portfolio has risen 784.6% since its inception, a bit above the fund’s market-price return.

Portfolio Value Outraces Market Price—and Hands Us a Discount

In other words, PTY’s portfolio gains and the dividends the fund has paid out, if reinvested, are greater than the market price you’d pay for PTY if you bought it now.

This is in large part compounding magic: when you reinvest 8.6% dividends in such a high-performing fund, your total return is bound to grow. But the other part of the story is PTY’s portfolio itself—the real source of its massive outperformance—and PIMCO’s skill in managing it.

Let’s take a look at that now.

A Misunderstood Fund With an Undervalued Edge

PTY’s portfolio consists of $2 billion worth of a variety of debt instruments:

Source: PIMCO

If we focus on the market value (MV) column, we see that the biggest allocation is to mortgage bonds (32.36%), separated into non-agency and agency mortgage-backed securities (MBS’s).

These are often depicted as complicated and exotic derivatives, but they’re pretty simple at their core: imagine taking a large number of mortgages, putting them together in a single portfolio, then selling portions of that portfolio to investors.

PTY would be one of these investors, because it can get less exposure to any one single mortgage, helping insulate its portfolio, even if housing crashes like in 2008. (It’s important to note that PTY survived 2008 and kept beating stocks during that crash).

The other large exposure, to high-yield credit, is to bonds from corporations with lower credit ratings. Think of this as a group of loans that companies take out and pay back at a higher interest rate. With defaults in these loans staying below 2% most of the time, it’s a lower-risk bet than many people think.

But it’s even less risky for PIMCO, because it’s the world’s second-largest bond buyer. It can access top-quality bonds and information about companies that most other investors can’t. This edge has helped PTY crush the market for decades. And since they still have that advantage, this outperformance will likely continue.

The Income Key to Financial Independence

A lot of investors hear things like “MBS’s” and “high-yield bonds” and get scared. Others cynically say that this kind of outperformance can’t last. But PTY not only survived the worst recession in living memory, its portfolio recovered faster than the S&P 500. And it paid out a high level of income throughout the crisis.

This is what really matters. Investors who held PTY during the crash saw unrealized losses in their portfolios—but they also lost no money if they didn’t sell. And PTY’s huge income stream makes it possible to hold during tough times.

Remember: PTY’s dividend yield is 8.6%. That means investors get $716.67 per month for every $100,000 they invest. If you wanted that same income stream from an S&P 500 income fund, you’d need to invest $450,000.

Yet financial advisors tell their clients to tolerate the pathetic yield they get from the stock market, because they don’t understand how funds like PTY have been crushing the market for years. But PTY’s record speaks for itself.

And PTY isn’t the only CEF that’s crushed the index. It isn’t even the best-performing CEF, or the highest yielding. There’s a whole universe of CEFs out there that you can harness for financial independence.

And now I want to introduce you to 5 of them with 8%+ dividends and 20% gains ahead in the next 12 months …

5 More 8%+ Dividends Wall Street Hides From You

Before I do that, I have to tell you that advisors aren’t the only ones trying to keep CEFs off your radar. The big fund companies are in on it, too!

I’m talking about massive providers of exchange-traded funds (ETFs), such as Vanguard and iShares. These firms throw big marketing dollars at ETFs, and because most of these funds are automated, their costs are next to nothing.

Translation: even the low management fees they collect are pure profit.

But CEFs are different: with average yields of 7% and up, they often beat ETFs on dividends alone! And that doesn’t account for the performance a top-flight human manager can add on, especially in areas like high-yield bonds, preferred stocks and real estate investment trusts (REITs).

I just showed you how PTY demolished its benchmarks while paying an 8.5% dividend—and bear in mind that its return is net of fees.

I don’t know about you, but I don’t mind paying a few hundred bucks more in fees if it will net me a market-crushing 777% return!

Which brings me to the 5 CEFs I want to show you now. They’ve delivered their shareholders life-changing gains, they yield 8% on average (with the highest yielder of the bunch paying an outsized 9.3%), and they’re all bargains now.

The upshot: they’re primed for 20%+ price upside in the next 12 months or less!

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

New funds are rare in the closed-end fund (CEF) world. But there’s a new kid on the block throwing off a monthly 6% dividend. Today we’re going to run through this new fund to see if it might have a place in your portfolio.

6% Dividends and Netflix-Like Growth—in 1 Fund

I’m talking about the BlackRock Science and Technology Trust II (BSTZ), launched in mid-May of this year.

The unique thing about BSTZ is right in its name: it’s no stodgy income play: its portfolio is packed with some of the fastest-growing tech plays out there.

I’m not talking about Apple (AAPL), Netflix (NFLX) or Facebook (FB). Instead, BSTZ focuses on off-the radar companies whose biggest growth lies ahead, like payment processor Square (SQ) and Twilio (TWLO), a communication platform many big companies already depend on.

That’s in contrast to many tech funds, which start and stop with the well-trodden territory of FAANG—Facebook, Apple, Amazon (AMZN), Netflix and Google (Alphabet [GOOGL]).

The Next Apple? It’s Likely in Here.

Source: BlackRock

Twilio is a great example. Its stock price has more than tripled since the start of 2018, and management feels there’s plenty more to come:

A 6% Dividend Plus Gains Like This

The next question is obvious: as none of these companies pays a dividend, what’s BSTZ’s plan for maintaining—and growing—its 6% income stream? Simple: it will sell these stocks when management feels they’re overvalued and buy when it senses a bargain. The profits then roll out to us in the form of that 6% dividend.

The strategy works because these are the kind of firms that, despite their small size, rely on their own cash flow to drive growth. They’re also the kinds of stocks that can get overbought quickly, giving BSTZ’s tech-savvy analysts the chance to sell at a premium.

Can a Growth-Focused Dividend Strategy Work? Absolutely.

The concern here, from a dividend investor’s point of view, is also obvious: can BSTZ keep paying out dividends by rotating in and out of tech stocks?

To answer this, let’s look at a competing fund: the Columbia Seligman Premium Tech Fund (STK). While the management team is different, the strategy is similar: find high-quality, fast-growing companies and buy them up.

A Tech Portfolio Focused on Quality

Source: Columbia Threadneedle Investments

As you can see, STK’s portfolio has gotten a little more conservative lately, with a shift from smaller growth companies toward big names like Alphabet and Apple. But don’t be fooled: most of the portfolio is still focused on fast-growing companies like Synopsys (SNPS) and Teradyne (TER). STK is an aggressive tech growth fund, just like BSTZ.

One difference? History. While BSTZ held its IPO a few months ago, STK has been around for a decade. Which is why its past is helpful in understanding BSTZ’s future.

Namely: was STK able to maintain dividends throughout its history by buying and selling tech stocks? Yes.

Steady Payouts—and More

Not only has STK maintained its distributions, which yield a whopping 8.8%, but it’s even paid special dividends in recent years, meaning it has been an even bigger income producer.

I expect the same from BSTZ, but with even bigger gains, thanks to its more aggressive strategy of buying younger, faster-growing companies before the rest of the world is aware of their true potential.

8.8% Dividends and Fast 20% Upside—in Your Income Portfolio?

BSTZ offers something all of us want but few people think is possible: a healthy dividend and fast upside from your income investments.

It’s the investment holy grail! Because with your income stream secure, any growth you can squeeze from this corner of your portfolio is gravy.

Free money. Pure and simple.

Too bad most people’s advisers tell them this dream is impossible. But not only is it possible, it’s easy with CEFs.

But BSTZ, promising as it is, isn’t our best play now.

For one, its dividend is lower than I’d like. With CEFs, it’s easy to bag safe 7%+ payouts, often paid out monthly. And second, because it’s a new fund, the hype has yet to die down: BSTZ trades at a 10% premium to its NAV (or the value of the stocks in its portfolio).

I don’t know about you, but I’m not fussy about paying $1.10 for every dollar of a fund’s assets. I don’t care how skilled its management team is!

28% Total Returns Waiting for You Here

That’s why I’m pounding the table on 4 other CEFs now: they yield an average 8.8% today, and they all trade at huge discounts to NAV.

The bottom line?

I fully expect 20%+ price upside from all 4 of these new picks, in addition to their huge dividend yields. Add it up and you’re looking at 28%+ total returns by this time next year, including their massive payouts and upside potential.

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 nothing less than a “dividend unicorn”: a closed-end fund (CEF) yielding 8.8% that’s raised its payout 24% in just the last six months. (And yes, it’s primed for many more hikes, too.)

Get this: because of the weirdness of the CEF market, this cash machine is still cheap today—trading at 13% off its “retail” price!

Let’s dive in.

I’m talking about the PGIM High Yield Bond Fund (ISD). It’s a smaller CEF (with just $552 million in assets). That small size helps set up our chance to buy cheap—and I’ll say more about why this deal exists in just a moment.

First, though, if you’ve been reading my columns on Contrarian Outlook, ISD’s name might sound familiar: two weeks ago, I highlighted a buying opportunity in the fund, writing that its huge discount is “going to disappear soon.” The reason? Its “improving dividend-growth potential.”

As if on cue, Prudential, the fund’s managers, announced less than a week later that ISD would hike its dividend—part of a recent trend that’s seen the fund raise its payout 24% this year alone:

8.8% Dividends and 24% Payout Growth—in 1 Buy

Heck, we’d be happy if ISD kept its 8.8% dividend where it is. But an 8.8% yielder with a payout growing this fast is unheard of.

And those hikes will likely keep on coming, for one reason: the Federal Reserve.

Management Reads the Fed Like a Book

Let’s quickly go back a few years. In 2015, when the Federal Reserve started raising interest rates, ISD had a strategy specifically designed to profit from the Fed’s hikes. At the time, ISD specialized in buying short-term corporate bonds, which are less sensitive to rate hikes than longer-term bonds.

That strategy helped ISD’s net asset value (NAV, or the value of its underlying portfolio) top the high-yield bond index, shown below by the SPDR Bloomberg Barclays High Yield Bond ETF (JNK):

ISD Taps the Fed for Benchmark-Beating Returns

Not only did ISD investors get corporate-bond exposure, they also snagged bigger gains and bigger dividends than they would have with JNK, which only yields 5.6%. The result was a larger total return and a bigger income stream.

“Powell Pivot” Leads to a Strategy Shift—and More Gains

Then, in early 2019, ISD changed its name and its mandate. As the Fed made clear at the start of the year, the central bank would pivot from raising rates to cutting them. The first cut came in July, and the market is expecting another later this year, with the possibility of two or more over the next 12 months.

In response, ISD pulled a 180. In March of this year, Prudential announced that the fund would abandon its focus on short-term corporate bonds and become a broader high-yield bond fund. The reason is simple: in a market where interest rates are going down, long-term high-yield bonds tend to go up in value.

And ISD is taking advantage, riding its new strategy to market-beating returns, with much less volatility than stocks:

New Strategy Ignites ISD

About That 13% Discount …

By now you might be wondering about that 13% discount I mentioned earlier, and how it can exist on a fund that yields 8.8%, has hiked its payout twice in six months and is whipping the index.

Part of the reason is the market jitters of the past few months, which have helped push ISD’s discount about as wide as it’s been since the fund’s new investment policy began:

A Buying Opportunity Appears

But that’s not the only reason. Another one is the fund’s small size.

As I said earlier, ISD only has $552 million in assets. That makes it too small for most big investors—the multi-billion-dollar hedge funds and investment banks—to take advantage of. The fund is just too tiny for them to make noticeable profits, and that’s led to a lack of coverage of ISD. And that means plenty of folks have missed the big shift in the fund’s mandate.

That inefficiency is an opportunity for CEF investors, because it won’t last forever. While some CEFs can have their discounts last for years, well-performing and high-yielding funds like ISD will more often than not see investors rush in. That means grabbing a position now will likely pay off handsomely in gains, dividends and payout hikes in short order.

4 More Safe 8.7%+ Dividends (with 20% Upside) Waiting for You Here

Here’s the best news: there are dozens more smaller CEFs that, like ISD, offer fast-growing dividends and smooth, steady gains.

But because small CEFs get so little coverage, hardly anyone knows! (Though in today’s world, where Treasuries yield less than 1.6%, more folks are starting to catch on.)

That makes now a great time to buy ISD, but there’s no reason to stop there when there are so many more high—and growing—dividends available. Like the 4 CEFs I’ll share with you right here. They pay 8.7% dividends as I write, their payouts are growing and, yes, these “stealth” funds are terrific bargains!

So much so that I’m calling for 20%+ price upside from each of them in the next 12 months.

The 4th fund on my list is a great example: it yields an incredible 10.7% and, like ISD, its payout is growing—up 150% in the past decade!

A Rare 10.7% Dividend That Soars

More folks are starting to catch on—which is why this fund has clobbered the market so far in 2019:

Income-Starved Hordes Pile In

The funny thing is, even though this fund should be trading at a big premium, you can still grab it at a discount! And with interest rates headed lower (making its huge payout even more appealing), its gains are just getting started.

But even if I’m wrong and it just trades flat from here, you’re still beating the market’s average yearly return in dividends alone, thanks to this fund’s outsized 10.7% dividend yield!

If that’s not the definition of a win-win, I don’t know what is.

Full details on all 4 of these income (and growth) powerhouses are waiting for you now, and, as with ISD, this is the very best time to buy them.

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.

The trade-war panic is in full retreat—and it’s left us three ridiculously cheap funds set to soar even higher than the market in the coming months.

Best of all, we’ll bag some very nice dividends from this trio: I’m talking outsized yields up to 7.4%!

Before I show them to you, let’s talk about why the market looks set to head higher.

Right now, the SPDR S&P 500 ETF (SPY) is up 18.3% for 2019. This sounds too good to last, but keep in mind that this jump started near the depths of the late 2018 correction—a low level.

That makes the year-to-date number misleading; a longer-term view shows signs of consistent and slow recovery from 2018’s major volatility:

A Steadying Market

There are a lot of reasons for this, but the two most important ones are good signs for stocks.

For one, US GDP growth is strong, up 3.1% in the first quarter, and second-quarter growth is forecast at a still-robust 1.9%, according to the Federal Reserve. That means the recession fears that were priced into stocks in 2018 were wrong—and stocks still need to rise to fully price in this current growth clip.

Speaking of the Fed, the market now expects the central bank to cut interest rates, and the Fed itself has said as much. Why? Because even with strong growth, inflation is stubbornly low, so there’s no reason to keep raising rates, as the Fed has already done over the last five years.

So if America’s economy is growing and interest rates are about to fall again, we should expect American stocks to benefit the most. But which will be the biggest winners?

Instead of picking them one by one, let’s look at three funds that not only choose stocks well, thanks to smart strategies, but also pay out above-average dividends to investors from the capital each fund earns.

Dividend Fund #1: Playing 2 Disrespected Sectors for Big Gains

The first fund playing this economic growth right is Source Capital (SOR), which has put a quarter of its assets in companies like Broadcom (AVGO), United Technologies (UTX) and American International Group (AIG)—three stocks that alone account for 10% of SOR’s assets. Those holdings are up 24.5% since the start of the year, but we’ve only seen tech and financials begin to recover from their 2018 weakness—setting us up for more gains ahead.

Monster Gains for Source’s Wise Picks

More importantly, SOR trades cheap, which means you get these stocks at a discount. That’s because SOR is a closed-end fund (CEF), a type of fund that often trades at market prices below their net asset value (or NAV), another name for the liquidation value of a CEF’s portfolio.

And right now, SOR’s market price is 13.7% lower than its liquidation value, so you’re getting these stocks cheaper than if you got them through an index fund like the Invesco QQQ Trust (QQQ), or if you bought them one by one.

Dividend Fund #2: A 6% Dividend From a CEF All-Star Team

There is a downside: SOR’s dividend yield is just 2.8%, which is low for a tech-heavy CEF. If you want more income and top-performing tech stocks, the BlackRock Science and Technology Trust (BST) might be for you. It yields 5.7%.

I’ve written about BST before—including last Thursday, when I named it my favorite of the tech-focused CEFs. Just look at its total return versus QQQ:

Outperforming the Market—With Income

BST has a dividend yield over five times higher than that of QQQ and it’s still able to outperform the index fund by a huge and growing margin.

How does it do it?

The answer may surprise you: management. BST’s managers have consistently picked winning stocks that outrun the well-known stalwarts of the tech world.

What this means is that, beyond the FAANG stocks you’d expect (those account for 25% of BST’s portfolio), the fund’s managers have shrewdly picked and timed purchases in breakout names like top holdings Alibaba (BABA), Salesforce.com (CRM) and Tencent (0070).

That strong record usually comes at a price, though; thanks to its market-beating returns, BST has attracted a high valuation in the past and recently traded at a 9% premium to NAV. But today it’s trading at a rare 1.5% discount, which means the premium could very easily return in the coming months.

Dividend Fund #3: Greater Income, Greater Safety

If 5.7% still isn’t enough of a dividend yield, I have just the fund for you: the Eaton Vance Tax-Advantaged Dividend Income Fund (EVT), which trades at its NAV and pays a huge 7.4% dividend yield.

EVT has given investors a monster 29% total return over the last year, versus just 19% for the S&P 500, making it yet another market outperformer.

That’s not surprising; EVT’s biggest holdings are popular S&P 500 names like JPMorgan Chase (JPM) and Johnson & Johnson (JNJ). This fund is very balanced, with about 10% or less of its assets in sectors such as tech, industrials, healthcare, energy, utilities and real estate.

Its biggest exposure is to the financial sector, which is up 15.4% in 2019 and set to keep going higher thanks to the booming economy.

20 More Rock-Solid Dividends—Up to 10.5%—Waiting for You Here

Steering you toward safe—and growing—7%+ payouts is exactly what I do in my CEF Insider service. 

And right now I’m ready to share my very latest high-yield picks with you: I’m talking about a fully stocked portfolio of 20 CEFs yielding 7.3% on average (with two throwing off monster payouts of 10% and up!).

This portfolio is the beating heart of CEF Insider—and you should NOT miss this special invitation: you get to “kick the tires” on all 18 funds in my portfolio with no obligation whatsoever!

The buys you’ll discover are poised to hand you 7% to 15% price upside in the next 12 months, along with their outsized dividends. That puts the total returns on many of these picks 20% and even more, thanks to the incredible discounts they’re trading at now.

Good luck finding a gain-and-income punch like that in your typical S&P 500 stock!

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

Let’s face it: you hardly ever get decent income from commodity stocks. And when you do, these payouts are usually first to get the axe next time, say, oil nosedives.

And with oil doing this…

Oil Falls—Oil Companies’ Profits to Follow 

… you may worry that it’s about to get harder to squeeze income out of oil companies.

Still, if you’re worried about inflation or the Federal Reserve distorting markets, or if you just want to hedge your stock portfolio, you’ll likely turn to commodities at some point. And there’s no more established inflation hedge than gold.

There’s just one problem: gold doesn’t produce anything.

As Warren Buffett said, you could put all the world’s gold in one big cube and it still wouldn’t produce income for you. That’s usually how it goes—and most gold miners don’t pay dividends because they’re too busy pumping cash into the business to mine more gold.

Fortunately there’s another way to get cash out of gold—and no small amount, either: I’m talking a 13.6% dividend yield.

How? With the GAMCO Global Gold Natural Resources & Income Trust (GGN), an actively managed closed-end fund (CEF) that holds energy and gold stocks, and pivots between them when the time is right.

Current holdings include Barrick Gold (GOLD), Newmont Mining (NEM), Chevron (CVX) and Exxon Mobil (XOM).Plus, as I just mentioned, GGN now yields a whopping 13.6%.

And if you’re worried that GGN’s strategy can’t beat its benchmarks, don’t be. Here’s what the fund has done in 2019:

GGN Tops Gold, Energy—and the Market Itself

Here we see that GGN has easily beaten stocks. Plus it’s also topped the energy sector and physical gold—the latter of which is tracked here by the SPDR Gold Shares (GLD). Both energy and gold are far below stocks in general, due to worries that inflation won’t rise soon, despite the Fed’s hints it may cut rates shortly.

If you’re wondering how a gold/energy fund can crush both gold and energy while also beating the stock market, let me explain.

With its portfolio flexibility, GGN can pivot between the two asset classes and buy what’s undervalued at the time. It can also avoid the worst of a downturn by cutting back on the weaker asset class, whether it’s gold or oil. This is why the supposedly safer energy index fund, the Energy Select Sector SPDR (XLE), fell further than GGN in late 2018—and while XLE still hasn’t recovered, GGN is already in the black:

Flexibility Is GGN’s Strength

What about the dividend?

GGN hasn’t cut distributions since early 2017, when the fund was still picking up the pieces from the 2014 oil crash, which also resulted in a dividend cut for GGN in 2014 (it’s worth noting XLE’s dividends were also cut at the same time, as were those of almost all energy companies). Fortunately, oil has been predictably range-bound since, making it easier for energy-fund managers to maintain their portfolios and payouts:

Oil’s New Normal 

And with GGN’s recent solid showing, it looks like the fund has found the perfect strategy for oil’s new normal, while also dipping into gold markets when necessary. If the Fed follows through with rate cuts to inflate the economy, expect inflation to follow, making GGN’s gold holdings, its strategy and its dividend a decent hedge against a Fed-driven stock market.

Urgent: Grab This Growing 10.7% Dividend Now—While It’s Cheap

If you want to go beyond volatile commodities, you can bulk up your portfolio’s safety and bag a mammoth 10.7% income stream with my top stock-focused CEF pick now.

I’ve made this top-secret CEF my No. 1 pick in stock-focused funds for 2 reasons:

• It boasts an amazing 10.7% dividend yield.
• Its cash payout is exploding, up an incredible 150% in the last decade!

How does this fund do it?

It’s run by an investment all-star team cherry-picked from 5 of the sharpest management firms on Wall Street.

Together, this crew invests in a “no-gimmicks” portfolio of value and growth stocks, all of which have deep moats protecting their businesses: names like Visa (V), Microsoft (MSFT), Alphabet (GOOGL) and Abbott Laboratories (ABT).

So how has this all-star team performed?

They’ve dominated, with most of my pick’s monstrous total return coming in cash, thanks to that huge dividend payout:

Crushing the Market in Cash

Finally, this fund trades at an unreal 5% discount as I write this. It’s only a matter of time before that shifts to a massive premium, propelling my pick’s market price higher as it does.

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 give you a strategy—and a strong 6.5%-yielding fund—that both shine when the market throws a tantrum.

And both are way better than what most people do when things get rough: cash in.

Many studies have shown that trying to time the market simply doesn’t work. And even if you did have the superhuman ability to get in and out perfectly, you’d still underperform a buy-and-hold approach. Thanks to compound interest, keeping skin in the game is more important than trying to save your skin.

Options: Your (Surprising) Friend When Markets Roil

Instead of fruitlessly trying to time the market, we’re going to do something that actually works (and takes far less effort!).

We’re going to hedge our stock portfolio with a tool many folks think is dangerous but really isn’t (when used the way we’re going to use it).

I’m talking about options.

Now it is completely true that buying options is akin to gambling. But we’re not going to buy options; we’re going to sell options (call options, specifically). And that changes the game completely.

Best of all, we’re going to sell our call options through a “covered-call fund,” a special type of closed-end fund (CEF)run by professionals who do all the work for us.

(Call options give the holder the right, but not the obligation, to buy a security before a certain date. The buyer pays the seller—in this case our fund—for this right, and that cash stream helps smooth out covered-call funds’ volatility.)

Funds that sell call options against a portfolio of stocks can do better than funds that simply buy and hold in volatile times, while also outperforming in sideways markets. Since stocks have been both volatile and sideways for the last year, this strategy is tailor-made for today.

That brings me to our pick, which both buys high-quality companies at a good price and limits its downside with options.

This Fund Defends Your Nest Egg and Yields 6.5%

Our CEF is one of the largest of its class and one of the most discounted: the BlackRock Enhanced Equity Dividend Trust (BDJ).

This is a 6.5%-yielder trading at an 8.9% discount to NAV, even though its discount was half that just a few months ago. Those two facts are important because they mean BDJ’s managers only need to get a 6% return in the stock market to maintain the fund’s dividend payout, which is easy, since the market averages an 8% annual return over the long haul.

And BDJ has done even better, with a 9.4% annualized return over the last decade.

A Sparkling History

In fact, BDJ’s dividend has remained the same for the last four years—ever since the Fed started raising rates and volatility in stocks increased. That makes sense, considering the fund’s portfolio and strategy.

Large-Cap Safety Through and Through

With a portfolio of large-cap stocks from all sectors and a focus on cash-flow generation, BDJ marries value-investing and covered-call strategies in one easy-to-buy fund.

Plus, those 6.5% dividends are a nice treat.

Yet BDJ isn’t getting much respect—at least not yet. After its discount to NAV widened at the end of 2018, when investors panicked, BDJ is still cheaper than it was a year ago, even though its NAV has pretty much fully recovered:

An Underappreciated Bargain

If volatility comes back, that NAV recovery may slow down a bit, but it should stay on the same trajectory. And if volatility disappears, expect BDJ’s discount to NAV to continue to vanish. That spells out a rare win-win for income investors looking to protect themselves while still getting a reliable income stream.

This 7% Dividend Is Recession-Proof—and Tax-Free, Too

Covered-call funds aren’t the only CEFs that can build some Zen into your portfolio during a market wipeout.

There’s another type of high-yield CEF that does the exact same thing. I’m talking about municipal-bond funds.

I know. Just the name is enough to make your eyes glaze over. But don’t let that put you off, because “muni” funds are perfect for any investor’s portfolio.

That’s because they’re backed by the most reliable consumer there is: the government!

States, counties and cities issue munis to fund badly needed infrastructure, such as roads, bridges, airports and railroads.

That makes them a solid source of income on their own—and you can boost your dividend stream even more if you buy your munis through a CEF, like the one I just recommended in the latest issue of my CEF Insider service.

Check out the steady upward climb my new pick has put on over the past year (in blue below), compared to the motion sickness your typical S&P 500 investor suffered:

Imagine Holding This “Steady Eddie” Fund

And it still has plenty of room to run!

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.

More CEF Insider subscribers have been asking me how to deal with volatility lately. It’s easy to see why:

Another Downturn Appears … Then Disappears

So today I’m going to give you an easy way to cushion your portfolio in this whipsawing market. I’m actually going to show you three ways.

All three are closed-end funds (CEFs) with a special “insurance policy” that tones down market lurches. But you’ll still enjoy market recoveries, like the one we’ve seen in recent days.

The best part: we’ll keep our income stream strong and growing, thanks to these three funds’ massive 6.7%+ dividend yields. That kind of income stream isn’t only nice to have, it’ll be critical when we run into the next crisis, as I’ll explain further on.

The Covered-Call Edge

Let’s start with the traditional ways most people try to cut down volatility. Those would be holding cash—which, of course, gets you zero return—or so-called “safe” assets like Treasury notes, which pay a measly 2.5% at best.

If we want to have any kind of livable income stream in retirement, we need to do better. Which brings me to the solution I talked about off the top. It’s called a covered-call fund.

Let me explain.

“Covered call” refers to a strategy where a fund holds a basket of stocks, then sells “call options” (or the right to buy a security if it hits a certain price) to an outside buyer against one of its stock holdings. That generates income, as the buyer pays the seller (in this case our closed-end fund) a “premium” for the call option. This extra cash flow, in turn, acts as a kind of hedge if the fund’s stocks fall in value.

That’s how covered-call funds take the edge off a volatile market. Now let’s talk income—and dive into the three specific covered-call funds I have for you today.

3 “Laid Back” 6.7%+ Dividends You Can Buy Now

Since these funds receive cash for their call options, you can expect a bigger dividend stream from them. And that’s exactly what you get.

Massive Income Up for Grabs

The chart above shows three passive index ETFs you’re probably familiar with: the SPDR Dow Jones Industrial Average ETF (DIA), the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Fund (QQQ). This trio attempt to match the performance of the Dow Jones Industrial Average, the S&P 500 and the Nasdaq 100 indexes, respectively.

As income plays, these three passive ETFs are all duds.

While DIA’s 3% yield is relatively strong, as you can see above, it’s the best of a pretty meager bunch when you compare them to their covered-call CEF alternatives: the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX), the Nuveen S&P Dynamic Overwrite Fund (SPXX) and the Nuveen NASDAQ 100 Dynamic Overwrite Fund (QQQX).

Heck, QQQX actually yields 10 times more than its ETF cousin!

These three CEFs track the three indexes very closely, but with one big exception: they also sell covered calls against their holdings, which is why their yields are many times greater than those of their index counterparts.

Also, since they sell call options on their portfolios, the value of their portfolios doesn’t fall as sharply during times of volatility. That’s why DIAX’s net asset value (NAV) bottomed above that of DIA in the last month:

A Step Ahead of the Index Once …

And DIAX wasn’t the only one, since QQQX’s NAV, while still down, as tech hasn’t recovered as much as other sectors, still didn’t hit the lowest point QQQ’s NAV did:

… Twice …

And for the broader index fund, the covered-call approach also helped SPXX’s NAV escape the lowest point SPY did:

… And Three Times!

So, as you can see, holding these covered-call funds helps limit your fund’s downside during brief periods of volatility while also providing you with the market’s upside when stocks recover.

But the most important part is the income.

Your “Dividend Hedge” Against the Next Crash

For any retiree, or anyone who uses their portfolio as a source of income, these funds are a no-brainer, and a way to safeguard against accelerated losses during a downturn.

Think of it this way: if you held SPY over SPXX and you needed a 6.7% income stream, you would need to sell part of your portfolio during the downturn to guarantee that income stream keeps coming in. But SPXX avoids this forced-loss selling: thanks to its higher yield, you’re getting a huge slice of your return in cash, cutting the need to sell anything when you don’t want to.

During times of protracted volatility, like we saw in late 2018, being able to avoid selling is the difference between double-digit losses and long-term gains driven by patience and perseverance. And that’s exactly what these CEFs make possible.

This “Hidden” 7% Dividend Is Recession-Proof—and Tax-Free, Too

Covered-call funds aren’t the only CEFs that can build some Zen into your portfolio during a market wipeout.

There’s another type of high-yield CEF that can do the exact same thing: municipal-bond funds.

Muni-bonds are among the steadiest CEFs you’ll find because they’re backstopped by the most reliable consumer there is: the government!

States, counties, towns and cities issue municipal bonds (or “munis”) to fund badly needed infrastructure, such as roads, bridges, airports and railroads.

That makes them a solid source of income on their own—and you can boost your dividend stream even more if you buy your munis through a CEF, like the one I recommended just a few days ago, in the latest issue of CEF Insider.

Check out the steady upward climb my brand-new pick has put on over the past year (in blue below), compared to the motion sickness your typical S&P 500 investor suffered:

Imagine Holding This “Steady Eddie” Fund

And it still has plenty of room to run!

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

I want to show you 10 funds that yield up to 9.4%—and that you should sell now (or steer clear of if you don’t own them).

Of course, near-10% yields are attractive, and I often see attractive funds yielding as much as (and more than) the 10 funds I’ll reveal in a second. But sometimes a big yield is too good to be true, and that’s the case here.

The reason I’m saying this now? These funds have been on a tear in the last few months, which is far out of character for both them and their asset class.

I’m talking about utilities funds.

Utilities are typically seen as a boring investment and, historically, a good one to be in. An investor who stuck to just utilities over the last 20 years has crushed the S&P 500 SPDR ETF (SPY), even if they simply bought the Utilities Select Sector SPDR ETF (XLU) and left it at that:

“Boring” Picks Crush the Market

This is one reason why I love utilities for the long term, but sometimes the market gets irrational and bids these stocks up too much.

Now is such a time.

There are two trends at play here. The first involves all utilities funds; after a short dip in late 2018, investors are running back to utilities, as they are with many other investments. The idea is that utilities fell too hard in late 2018, creating value that needs to be scooped up now.

It’s a good hypothesis, and it’s true for many assets. But it’s not true for utilities.

Too High, Too Fast

What investors forget is that utilities didn’t go down in 2018; in fact, they were one of the few asset classes to have a positive year, gaining about 5%. That means they’re now up nearly 24% in the past year and 16.7% since the start of 2018.

That’s just too much too soon.

Why? Because utilities aren’t terribly surprising assets. They buy commodities and produce electricity and other, well, utilities for consumers, while hedging their commodity exposure. It’s a predictable industry, which makes for a strong cash flow and a high yield (XLU’s 2.9% yield is one of the highest among passive stock funds).

While that means XLU is best avoided now, there are also warning signs in the world of utility-focused closed-end funds (CEFs). Of the 10 utilities CEFs out there, seven have had year-to-date market-price returns exceeding their NAV returns—or the performance of their underlying portfolios:

With the exception of DNP, these funds have pretty much priced in their NAV returns (which are all exceptional) for 2019, which curbs their upside.

That might make DNP look appealing here—especially when you consider that it has a decent track record compared to its peers:

With an annualized 10.7% return over the nine-plus years since its IPO, DNP is just a bit better than a typical utilities CEF, even if it has trailed XLU’s 12.5% annualized return over the same period. But DNP’s reliable dividend and 6.7% yield more than make up for that. With this in mind, DNP isn’t a bad fund, despite the market privileging other utilities funds over it.

Unfortunately, that doesn’t mean DNP is an option for income investors right now. Remember, one of the key benefits of buying CEFs is getting a strong collection of investments at a discount, yet DNP currently trades at the second-highest premium of any utilities CEF:

While DNP’s 15% premium is nowhere near as massive as GUT’s near 40% premium, it’s still a large amount that could feasibly disappear any minute if the market decides to turn on utilities—which appears to be an imminent threat.

And while the discounted CEFs above could all be considered attractive, only GLU, DPG and MGU have discounts wider than their long-term averages. But in the case of GLU and DPG, that discount makes a lot of sense; both funds are duds, being the worst performers in the CEF utilities universe and trailing the index by a wide margin.

And as for MGU, its foreign exposure at a time when global growth is slowing and American growth is strengthening makes it a high-risk venture—which explains its big discount.

The bottom line? Utilities are a reliable sector for income, and utilities CEFs are a great high-yield way to buy into that sector, but now is clearly not the time to buy these funds.

Forget Utilities: This 10.7% Dividend Grew 150% (and it’s just getting started)

Now that we’ve covered the 10 funds you need to sell in this soaring market, let’s talk about what we’re going to buynow.

Because contrary to popular belief, there are still plenty of bargain dividends to be found out there—especially in CEFs.

Like the ignored fund my team and I just uncovered: it boasts something most people will tell you is impossible: a 10.7% dividend that’s growing triple digits!

That’s right: this unsung fund yields a mammoth 10.7% as I write, and its payout has exploded 150% in the last decade:

1 Click for a Massive Yield and Soaring Payout Growth

How does this fund do it?

My 10.7%-paying pick is run by a hand-picked investment “all-star team.” These pros have quietly assembled a “no-gimmicks” portfolio of value and growth stocks from across the economy, such as Visa (V), Microsoft (MSFT), Alphabet (GOOGL) and Abbott Laboratories (ABT).

I know what you’re going to ask next: how has this so-called “all-star team” performed in the past?

See for yourself:

A 10.7%-Paying Market Dominator

Best of all, this monstrous return includes dividends, a huge slice of it was in cash, thanks to my pick’s massive dividend payout.

Finally, this fund trades at an unreal 5.1% discount as I write. When you consider its market dominance, 10.7% dividend and 150% dividend growth, you can only come to one conclusion:

It’s only a matter of time before investors bid this CEF up to a huge premium—driving its price through the roof!

The time to buy is now.

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.