One of the most reliable income-producing sectors has been hit hard over the past year, handing you a terrific shot at outsized dividend yields running all the way up to 10%.

In a moment, I’ll show you two funds that let you grab these huge income streams at a big discount—and one that looks like a strong buy but is way overpriced and headed for a fall. You’ll want to keep that one as far away from your portfolio as possible.

The sector all three of these picks come from is utilities—one of only two sectors of the S&P 500 that’s down over the past year (the other being consumer staples), with a 2.6% overall decline.

The fact that utilities and consumer staples are down tells us one thing: the market has a bigger appetite for riskier stocks on confidence that the economy is expanding, with GDP growth slated to reach 3% by the end of 2018.

But that confidence has resulted in some folks shifting cash away from so-called “boring” utilities—in effect throwing out the baby with the bathwater, as the old saying goes.

And for dividend investors like us, that adds up to a nice buying opportunity.

Because as you can see in the chart below, all four of America’s biggest utilities are having no trouble making their dividend payouts (the exception, Southern Company [SO], saw its payout ratio spike as it paid for an acquisition, but that’s quickly returning to normal):

Stable Dividends? Check.

And if you want more proof that these dividends are ironclad, take a look at the history:

Dividend Growth Is in Their DNA

That’s why utility stocks are often called “orphan and widow” stocks: they’re reliable payers you can buy, forget about and enjoy your dividend checks.

How to Grab Up to 10% Cash Payouts From Utilities Now

Unfortunately, this is where most people get hung up. Because despite their stable cash flows and rising dividends, utility stocks are far from easy to pick. They’re largely regional and, as a result, are exposed to demographic flows and local economic developments that are tough to track.

That’s why the benchmark ETF, the Utilities Select Sector SPDR ETF (XLU), is so popular.

With a 3.4% dividend yield, XLU’s payouts are nearly double those of the S&P 500. But the great news is that we can do even better, doubling XLU’s payouts again by digging into a high-yield corner of the market few people even know exists: closed-end funds (CEFs).

Right now, there are 9 utility-focused CEFs with dividends ranging from 6.4% to 10%, making them all intriguing options. But there are 2 in particular that should be high on your list.

Utility CEF Pick No. 1: This 8.6% Markdown Won’t Last Long

The first CEF is the Reaves Utility Income Fund (UTG), which is trading at an 8.6% discount to NAV after trading at a premium price for most of 2017. UTG gives investors a generous 7.3% income stream, or more than twice the payout of XLU.

That’s not the only thing UTG has going for it. This fund has crushed the benchmark ETF over the last decade, nearly doubling its total return while also giving investors a much higher payout. Bigger returns and a bigger income stream aren’t easy to find—but UTG offers investors both:

An Index Crusher

CEFs with this kind of outperformance are usually priced at a premium to NAV, and given that this one was priced at a premium itself just a few months ago, the time to make a move is now, before its current markdown bleeds away.

CEF Pick No. 2: More Risk, More Reward

In addition to UTG, there’s another utility CEF that is worth considering—although I’ll tell you upfront that there is more risk involved.

I’m talking about the Duff & Phelps Global Utility Income Fund (DPG), which is trading at a 10.6% discount to NAV.

I’m going to be honest: DPG doesn’t have a great history. It’s underperformed the index since its IPO in 2011, although a lot of that underperformance has shown up since 2014:

This Chart Is Ready to Flip

Why the poorer performance?

Well, remember back in 2014, when oil prices crashed? This was great for American utilities, which are net consumers of energy. But DPG is a global utility fund, and a lot of energy providers outside of America are also energy producers, so they’re much more sensitive to oil prices than their US cousins.

But oil is soaring in 2018. We’ve already seen West Texas Intermediate (WTI) prices jump 12.8% this year, and the strong economy probably means prices will go even higher. That could be a boon for DPG, as it benefits from higher consumption and higher oil prices.

Plus, DPG’s luxurious 10% income stream is nearly triple that of the index fund, so you’ll be well compensated by that hefty dividend while you wait for the fund’s discount to close and its NAV to rise.

Now we have to talk about another utility fund that has outperformed the market but isn’t the screaming buy it appears to be. Far from it.

An Overpriced Utility CEF to Avoid

The DNP Select Income Fund (DNP) is another utility CEF that has beaten XLU over the long term, as you can see here:

Another Outperformer

While DNP’s outperformance deserves to be rewarded, the market is going way too far, currently rewarding it with a 20% premium to NAV. Meanwhile, UTG—the first utility fund I told you about—trades at an 8.6% discount! Not only that, but UTG has beaten DNP for a long time, indicating that it is the superior fund.

The bottom line? DNP’s huge premium—and the downside it implies—alone make this CEF a fund to avoid right now.

Why Wall Street Ignores CEFs

At this point you may be wondering why you’ve never the media (and likely your own financial advisor) talk about the big yields and deep discounts in the CEF space, like the two I’ve showed you today.

The answer? They’d rather just talk about what’s popular—big-cap stocks or overbought ETFs. It saves them a lot of research, and they get paid the same amount anyway!

That’s too bad, because the totally inefficient CEF market is serving up some incredible deals on funds paying hugedividends right now, such as …

My No. 1 CEF Buy Now: 810% Gains and 8.4% Dividends in 1 Click!

My favorite CEF to buy right now has crushed the market since inception, with a monstrous 810% return!

1 Chart That Demolishes Conventional “Wisdom”

This is incredible—the kind of gain you might expect from, say, a small-cap tech stock, not a conservative fund like this one.

To give you a little more context, my No. 1 pick is a pharma fund run by some of the smartest minds in the business—researchers and doctors with “boots on the ground” experience zeroing in on the next billion-dollar-plus blockbuster drug.

That alone is reason enough to put this one on your short list.

There’s more, though. Because this dynamic fund also throws off an incredible 8.4% dividend, too!

You’d think a gain and a payout like that would at least get a few folks in the mainstream media talking.

No way. Not yet, anyway.

Why? For one, this low-key CEF is tiny, with just a $391-million market cap, so it gets even less attention than your typical CEF does.

Yet as I write, this fund trades at a 4% discount to NAV. That may not sound like much, but it’s traded at fat premiums MANY times in the past 5 years.

When it does so again, we’ll be locked in for fast 20%+ upside from here, on top of that massive dividend!

Still feeling the taxman’s sting from April? Then you probably need to consider getting some tax-free income.

Having an income stream the IRS can’t touch may sound like pie in the sky, but it’s a reality if you hold municipal bonds. That’s because the tax code provides an exclusion for these bonds, allowing most US investors to collect interest payments from them tax-free. And in many states, income from those bonds is exempt from state taxes, as well.

If you aren’t intrigued yet, then let me show you some numbers—and what they could mean to your portfolio.

If you’re in the highest tax bracket (37%) and you get a 6%-yielding municipal-bond fund, that income is the exact same as a 9.5% dividend from stocks. And municipal bonds are nowhere near as volatile as high-yield stocks. Just compare the volatility of the iShares National Muni Bond ETF (MUB) and the Vanguard High Dividend Yield ETF (VYM):

A Smoother Ride Makes Withdrawals Easier

Not only does this lower volatility give you peace of mind, but it also makes withdrawing from your principal easier in cases of emergency.

There’s just one problem—MUB yields a paltry 2.4%!

But have no fear—I’m going to show you 3 closed-end funds (CEFs) that yield far more than that and are still tax-free. Before I get to them, though, let me tell you why you should choose these funds, and why now is the time to jump in.

Why Muni CEFs—and Why Now

One of the biggest benefits of closed-end funds is how inefficient they are. It sounds crazy, but CEFs cater to retail investors, who often just don’t know how far apart these funds’ market prices are from their their net asset values (NAVs), resulting in big discounts for a lot of CEFs.

In fact, the average CEF now trades at a 6.3% discount to its NAV—which is near the biggest average discount over the last year.

But some CEFs are more heavily discounted than others, while some actually trade at a premium—or for more than what their portfolios are worth. That risk of overpaying is why you can’t just choose any CEF.

The most interesting trend in CEFs over the last few months has been the shrinking discount to NAV among equity funds and the growing discount among bond funds—but nowhere is the discount bigger than among municipal-bond funds. Take a look:

Big Discounts in Muni Funds Create Buying Opportunities

Source: CEF Insider

With the average discount among muni-bond CEFs at 8.6% (which is near double the 5.3% average discount of just a year ago, by the way), these funds offer us an incredible buying opportunity right now.

And while a few discounts in US-stock CEFs are still there, the recovering market that I predicted back in April means that the oversold equity funds I showed you back then aren’t so cheap anymore, so we need to get a bit creative.

Which is why muni-bond funds are the “it” thing to buy right now.

For one, with their unusually large discounts, muni funds are finding it easier to sustain their dividend payments, providing us with a safer income stream. Also, despite popular belief, municipal bonds do not go down during periods of rising interest rates.

In fact, this “rates up, muni bonds down” myth is a big driver of why muni-bond CEFs are so cheap now, again giving contrarians like us an opportunity to get tax-free income at a heavy discount.

Don’t believe me? Take a look at this chart from the mid-2000s, when the Federal Reserve increased interest rates by over 400%:

Interest Rates Rise—and so Do Muni Bonds

That blue line is the Invesco Municipal Opportunity Trust (VMO), the first pick I want to show you today. It’s a 5.7% yielder full of tax-free muni bonds that went up a full 17% during the last sustained rate-hike cycle.

And it’s unusually cheap now: its 10.8% discount to NAV is massive on its own, but it’s even more attractive when you consider that VMO’s discount has averaged just 2.3% in the last decade.

On top of that, VMO is managed by Invesco, one of the world’s biggest fund companies, with over $950 billion in assets under management (AUM). So you can count on this fund being reliable and secure.

Additionally, VMO has a long history. It’s been around since the early ’90s and has delivered consistently strong results since then—surviving the dot-com bubble bursting, the subprime mortgage crisis and all the drama in between:

A Steady Long-Term Performer

Which brings me to my second big yielder worth considering: the PIMCO NY Municipal Income III Fund (PYN), a 5.9% payer managed by one of the most respected names in the bond world: PIMCO, with $1.8 trillion in assets under management—more than the GDP of several small countries!

PIMCO built those assets through outperformance, which is why most of the company’s CEFs tend to trade at premiums to NAV.

PYN, however, is different. With a 2.6% discount to NAV, this fund is trading for less than the value of the assets in its portfolio—something it hasn’t done since 2009! And there’s no reason for it to trade so cheap, since PYN has doubled the return of its benchmark, MUB, since the Federal Reserve started raising interest rates in late 2015:

A Huge Overachiever

With such a track record, expect this one to trade at a premium to NAV soon. But there’s one other thing that makes PYN attractive: its size, or lack thereof.

Because PYN has just $51 million in AUM, it’s simply too small for a lot of large institutional investors—and that small size means that it’s incredibly inefficient, even by CEF standards. That’s why this fund typically has traded for a premium to NAV for most of the last decade, making its recent discount that much more appealing.

The last fund I want to show you is the BlackRock Municipal Income Investment Trust (BBF), which commands attention thanks to its 6.1% yield.

But that’s not the best thing about this fund. Like PYN, BBF is really small, with just $142.2 million in AUM, which is about a quarter of the size of most muni CEFs. And that small size results in mispricings that don’t reflect its stellar track record.

Another Big Winner

As you can see, the BlackRock Municipal Income Investment Trust has beaten the index for a very long time (this chart just covers five years, but since the fund’s inception in 2007, BBF has returned 79.3% versus MUB’s 50% over the same period).

I may be burying the lead here, though; the really nice thing about BBF is its manager: BlackRock, the largest investment firm in the world, with a staggering $6.3 trillion in assets under management. That means it has the connections to get the best municipal bonds as soon as they go IPO, the best minds and technology to analyze those municipal bonds and the best market position to trade those bonds most profitably.

Is this corporate heft priced in to BBF? Hardly. It’s trading at a massive 7.4% discount to NAV, after trading at a premium for most of the last three years:

BBF Suddenly Very Cheap

Should we expect this premium to NAV to come back? The short answer is yes. The discount only showed up—and steepened—in the last few months due to the market panic of the last few months.

But the market is getting more comfortable, which will likely result in BBF returning to its normal high price—giving those of us who buy today some tidy capital gains on top of that massive 6.1% income stream.

This CEF Doubled the Market and Pays 7.8% in Cash!

There’s no doubt that in a few months we’ll look back at the selloff in muni bonds and recognize it for the terrific buying opportunity it was. So don’t miss your chance to lock in the safe, tax-free payouts muni-bond funds offer now—while you can still get them cheap.

Here’s something else you should know: “munis” aren’t the only assets to be hit by the silly (and wrong) investor myth that rising rates are a bad-news story.

Another? High-yield real estate investment trusts (REITs).

And just as I showed you with VMO above, REITs also do great when rates head higher—contrary to what most folks believe.

Check out how the benchmark REIT ETF, the Vanguard REIT ETF (VNQ) did in the last sustained rising-rate period:

Rates Rise, REITs Surge

That makes now a terrific time to buy this unloved asset class, too. But just as we did with muni-bond funds, we’re going to take a pass on the popular REIT ETF and go with my top CEF pick in the sector.

Why?

For one, my No. 1 REIT CEF pick fund hands us an outsized 7.8% CASH dividend today. And talk about stable: it not only survived the financial crisis, it rebounded far more quickly than the market and has gone on to hand investors far bigger gains since.

An All-Star Management Team in Action

And keep in mind that this fund posted these incredible returns while investing in real estate: the very thing that caused the collapse in the first place!

Think about that for a moment.

This fund not only more than DOUBLED the market’s gain—even when you factor in the Great Recession and the subprime mortgage crisis—but its incredible management team did it while paying a rock-solid 7%+ dividend the whole time!

If this isn’t a fund worth paying a premium for, I don’t know what is. But thanks to the wacky mispricings in CEF land, this one’s trading at an absurd discount to NAV today.

Once the herd catches on to what it’s missing, this fund could easily blow into premium territory.

How do I know? Because it’s happened many times in the past—and when it does again, we’ll easily be sitting on an easy 20% gain, on top of this fund’s juicy 7.8% dividend 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. 

Source: Contrarian Outlook 

With over 500 closed-end funds (CEFs) on the market, how do you choose the best one?

It’s not an easy question to answer, because there are literally dozens of metrics any CEF investor should look at before buying.

But you don’t have to worry, because in a moment, you’re going to get the “guts” of the 5-point system I’ve carefully designed to pick winning CEFs for our CEF Insider service.

So why is it important to have a good system?

Because if you don’t, you could find yourself holding an empty bag—like investors who bought the Virtus Total Return Fund (ZF) at the start of the year because they were seduced by its 15.3% dividend yield.

Sadly, that move resulted in a massive loss in no time flat, even with dividend payouts:

The Perils of a High Yield

What’s even sadder is that there are plenty of funds that invest in the same assets as ZF that have done far better over the long term. Take the Liberty All-Star Growth Fund (ASG), which also focuses on high-growth stocks and is up a nice 22.8% since the start of 2018.

A Better Long-Term Pick

This is one of many instances where blindly buying a CEF would have cost real money. So how do you avoid the trap?

My 5-Point System

When choosing CEFs, I look at 5 crucial points that drive each buy call I make. And they can help guide you, too. They are:

1. Management: How good is the team at the top, and has the fund changed horses lately (frequent management changes are an obvious red flag)?
2. Discount: What’s the fund’s discount to its net asset value (NAV, or the value of its underlying assets), and what has that markdown been historically? We want a current discount well below the long-term average to drive our upside.
3. Portfolio: What does the fund hold now, are there any big changes to the portfolio, what’s the rationale behind those changes, and how are those assets going to perform in the future?
4. Dividend: How sustainable is the payout, what are the chances of a dividend cut, and how low can the payouts go? (Key here is to look at yield on price, yield on NAV, changes in NAV and total net investment income, or NII)
5. Current Climate: How does the fund’s investment strategy fit within your broader portfolio and view of changes in the broader economy?

In other words, the system combines a variety of bottom-up questions about the fund’s portfolio, strategy and management with top-down questions about the asset class and economy as a whole.

The System in Action

To show how this works, let’s look at a recent example: the BlackRock Science and Technology Trust (BST). Although this fund had soared a massive 58.6% in 2017, my system still urged readers to jump head-first into this high-quality fund just as 2018 arrived, because it ticked all the right boxes. You can read my original recommendation here.

Judging by who was managing this fund, the market price and NAV performance, and the sustainability of its payouts, it was clear that this fund was not done rising. That turned out to be accurate: BST has given investors a 33.9% total return since my system flagged it less than six months ago:

A Quick Ride Up

What makes this performance all the more impressive is that it is more than double the fund’s index, the Nasdaq 100. If you tried to get into that index with the “dumb” passive index fund, the Invesco QQQ Trust (QQQ), you’d be missing out on $1,971 for every $10,000 invested.

In less than six months.

3 CEFs to Put on Your Watch List Now

Nowadays, there are a couple dozen CEFs that are getting to that perfect place where the fundamentals and the broader economic climate are combining to create a perfect storm for massive upside and sustainable high yields.

The first is the BlackRock Resources & Commodity Fund (BCX), a commodity specialist that has done well in a tough environment for commodities. It’s an example of a well-managed portfolio with a great management team—but while the bottom-up is good for BCX, we’re not quite there from a macro standpoint yet. But we’re getting closer.

In the utilities world, there’s the Gabelli Global Utility Fund (GLU), which is diversified and has the added bonus of going beyond the US to take advantage of currency fluctuations. I haven’t added it to the CEF Insider portfolio yet, for a couple of reasons. For one, its 3.9% dividend is too small, and its discount to NAV isn’t low enough, given how rising interest rates tend to lower demand for utilities stocks.

Instead, I’ve chosen a diversified equity fund with a bigger discount than GLU’s and a REIT fund that is less sensitive to higher interest rates.

And both of those picks are up nicely, up 13.6%, on average, since my recommendation, while GLU has gained just 9.1%. And instead of paying a 3.8% dividend, these two picks are paying 8.1% each. (Click here to get access to my complete CEF Insider portfolio, including these two fund picks.)

Finally, another interesting fund for your watch list is the BlackRock MuniHoldings Fund (MUH), a municipal-bond fund with a massive 5.8% dividend payout (which is tax-free for many Americans). MUH is also one of the best-performing muni-bond funds in the CEF universe (its 7.5% annualized return over the last decade is far above the 5.2% average across muni-bond CEFs).

Not only is BlackRock the biggest municipal-bond investor in the world, giving it a big edge in this complex market, but MUH’s 8.8% discount to NAV is far bigger than its average 3.4% discount over the last decade.

The only problem? Interest rates. The market still hasn’t priced in the Federal Reserve’s aggressive rate hikes for this year and the next, but when it does, this fund will be ideally positioned to buy and hold for years.

When it comes to investing, too many folks ignore the signal and listen to the noise.

Case in point: one of the biggest stories of 2018—a looming trade war between America and China. Lately, the story has mutated into one about a trade war between America and, well, just about everyone—Europe, Asia, Mexico, even Canada!

But this trade war is noise—2018 has been a great year for stocks, and it’s going to get even better. Further on, I’ll give you a couple great ways to cash in.

First, a look at the facts, which are plain for everyone to see … and they clearly prove the naysayers wrong. You only have to look as far as corporate earnings.

American Businesses Are Booming

In the first quarter, profits soared a shocking 24.9% and went even higher for companies selling outside the US. At the same time, exporters saw 13.1% sales growth, while all S&P 500 companies’ sales were up 8.2%.

So all great news, right?

Funny thing is, while this news was trickling out, the stock market did this:

Mr. Market Takes a Nap—and Gives Us Our Shot

While the data told us companies’ stocks should be soaring, they were grounded—and the early-year correction held on, even as the data got better. More recently, stocks have been rebounding, as investors finally noticed 3 locked-in trends driving the market higher.

#1: Fatter Profits, Higher Stocks (it’s inevitable)

Second-quarter earnings look strong, with 19% gains expected. And that trend of exporting companies outperforming importing ones is still there (net exporters are expected to see 23.9% earnings increases), again proving the trade-war hysteria wrong.

And I know I don’t have to tell you that where profits go, stock prices follow.

Here’s yet another reason why now is a great time to get in: because of this breakneck earnings growth, the S&P 500’s forward 12-month P/E ratio is 16.6, lower than the long-term average of about 17. But most folks miss the fact that since the S&P 500 is dominated by tech companies that didn’t exist decades ago, and since tech firms tend to have higher P/E ratios, that 16.6 level is even lower than it looks.

#2: Sales—the Key to Rising Profits—Are Heating Up

If a company is growing earnings while revenue slides, it’s probably cutting costs and not investing in itself. But if revenue is rising, obviously the market wants more of its product, and that’s never bad.

And revenue growth is going up. In the first quarter, sales rose 8.2% for the S&P 500, and they’re expected to rise 8.7% in Q2. Simply put: it’s getting easier for businesses to grow, and who wouldn’t want to invest in that kind of market?

#3: No Bubbles in Sight

What’s more, there’s nothing in the economy (with the exception of Bitcoin and cryptocurrencies, which I warned about at the start of 2018) that looks like a bubble.

Corporate-debt levels are modest; default rates have been falling since the end of 2015 (even though this is when the Federal Reserve started raising interest rates); housing-price growth keeps moderating; and other indicators (consumer-debt ratios, inflation, unemployment) look strong.

In short, despite the immature politics and hysterical panic we read about every day, Americans and companies are managing their financial lives in a mature, healthy and sustainable way. And that’s great for the market.

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. 

Source: Contrarian Outlook 

By this point, you’ve probably heard that earnings season has been off the charts so far.

But there’s a problem.

You see, corporate profits are so good that the big buying opportunity I’ve been telling you about for months is vanishing fast!

Why? Because US firms are too profitable, and economic growth is too strong for the herd to not want to pile into stocks very soon.

So today we’re going to front run those folks by buying before they do.

In a moment, I’ll show you not only why you should buy now, but 2 funds you that are solid bets for serious upside and a huge dividend stream of 7%.

Funny thing is, these 2 funds hold the S&P 500 and Dow stocks you know well. And they pay that huge income stream and return 9% in gains and dividends, on average, every year.

Before I get into these funds, let’s take a look at just how good this market is.

A Profit Bonanza

In February I pointed out that earnings growth was set to remain strong for 2018, and again nearly a month ago, I pointed out that earnings estimates were going up as stocks went down. This is very rare. When it does happen, it’s usually a blaring signal of a strong bull run.

And now that companies are actually reporting earnings, it looks like I wasn’t optimistic enough.

So far, nearly 20% of S&P 500 firms have reported, and 80% of those companies are reporting earnings per share (EPS) far above estimates. Heck, in some sectors, all companies are crushing the Street’s forecasts!

Earnings Come in Piping Hot …

Tech and finance are doing well, thanks to non-stop demand for gadgets and higher interest rates, which boost bank profits. But sectors that have been beaten down so far in 2018, such as energy and real estate, are also doing better than expected.

This all means that earnings growth so far is clocking in at 18.3%, well above the 17.1% growth rate forecast at the end of March and putting us on track for what could be the best earnings record in history.

Yet stocks have gone nowhere in 2018.

… But Investors Miss the Memo

Bottom line: buy signals simply don’t get much stronger than this.

2 Funds to Put on Your Buy List Now

Now you could just run out and buy the SPDR S&P 500 ETF (SPY). You’d get a 1.8% dividend yield, turning your $100,000 investment into $152.50 per month in income. Or you could buy the two other funds I’m going to spotlight today and get almost 4 times that: $591.67 per month in income.

Earnings Season Pick #1: 7.2% Income From the S&P 500

The first fund I’ll show you is the Nuveen S&P 500 Buy-Write Income Fund (BXMX). As the name suggests, it invests in the S&P 500 while also selling “insurance” on those same stocks in the form of “call options” to give you a higher return and a higher income stream. The fund yields 7.2% and has mostly matched the S&P 500’s total return over the last 3 years (note that all returns are after fees).

A Hidden Cash Advantage

So if SPY and BXMX are nearly identical in performance, why not just go with the ETF?

Simply put, the income. Because of its bigger yield, a larger portion of the returns you get come in the form of cash paid in the form of dividends. And unlike SPY, where your capital gains can come and go with a volatile market, you can take your cash from BXMX and put it elsewhere—or, if you prefer, straight back into BXMX. The choice is yours.

Earnings Season Pick #2: Top Stocks, Low Volatility

Now let’s look at the Nuveen Dow 30 Dynamic Overwrite Fund (DIAX), which is almost identical to BXMX except that it buys the Dow Jones instead of the S&P 500. Since the Dow tends to be less volatile, this is a good option for toning down market swings.

Oh, and this fund also pays a 6.9% dividend yield.

The best part is that DIAX is actually beating the total return of the Dow Jones index fund, the SPDR Dow Jones Industrial Average ETF (DIA):

Beating the Market With 3x the Dividend Income

It’s tough to argue with outperformance—but outperformance that includes an income stream that is 3.4 times greater than that of the index fund ($575 per month versus DIA’s crummy $169.17 on the same $100,000)? No one can quibble with that.

1 Click for Even Bigger Dividends and a Safe 28% Win This Year

I’ve got 5 other “limitless” profit machines poised to deliver income and gains that go far beyond a medium-term earnings-season pop.

I’m talking about:

• • A safe—and growing—8.2% average dividend, and
• 28%+ total returns in the next 12 months.

What’s totally bizarre about this situation is that these 5 funds are even further off the radar than BXMX and DIAX, leaving them trading at even wider discounts (which is where a big part of our 28% total return will come from).

These huge markdowns completely break with the historical pattern for these 5 winners, and they simply can’t last, especially when you consider that these 5 funds also hold S&P 500 names expected to rack up big earnings beats.

The best thing about these 5 cash machines is that they’ve delivered market-crushing gains with much less volatility than what your average ETF investor is forced to stomach. Check out the steady climb one of these funds has piled up since inception, compared to the sickening ups and downs of the market:

A Smooth Ride Higher

The topper: this fund is run by one of the top minds on Wall Street and pays a rock-solid 10.0% dividend today!

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. 

Source: Investors Alley 

Today I’m going to show you 4 funds that, when put together, give you a juicy 7.2% dividend yield.

And that’s just the start. In addition to giving you $595 per month in income for every $100,000 invested, this “instant” 4-fund portfolio gives you diversification that limits your risk of losing cash in a market downturn.

Oh, and there is capital gains upside here for you, too.

The reason for that upside is that all of these funds are trading at a pretty big discount to their net asset value (NAV).

Let me explain.

Each of these picks is a “closed-end fund,” a unique type of fund that has a few key advantages over more familiar mutual funds and exchange-traded funds. A big one is that CEFs can—and very often do—trade on the market at a price that is below the actual market price of all of the assets inside the CEF.

How is this possible?

It boils down to this: CEFs set how many shares are in the fund when they do an initial public offering and don’t release new shares in the future. That weird mechanism means funds will often trade for less than their NAV—and those discounts can be really big.

Which brings me to…

“Instant Portfolio” Pick #1: A Real Estate Titan With a 7.9% Dividend

Every real estate developer, landlord and house flipper’s dream is to get their hands on a property that’s selling for 17% below its actual market value. But those deals are hard to come by.

In CEF land, however, they’re easy to get.

All you need to do is buy shares in the RMR Real Estate Income Fund (RIF), a CEF that’s been around since 2005 and not only survived the bursting of the 2008–09 real estate bubble but has also been paying out massive dividend checks ever since.

And right now, RIF is paying out a 7.9% yield.

The fund’s portfolio makes this possible. RIF owns shares in some of the largest real estate investment trusts (REITs) in the world—basically companies whose sole purpose is to buy, manage and rent out real estate.

And since RIF’s portfolio is diversified across 125 REITs, shareholders are getting a slice of literally thousands of properties in all kinds of sectors: retail outlets, assisted-living facilities, offices and even data centers for cloud-computing companies.

And here’s why you want to buy now:

A Big Sale Ending Soon

Notice how the fund’s discount to its NAV has gone off a cliff in recent years—but it’s starting to recover? The current 16.7% discount is a bargain that may end soon thanks to a pile-in back into CEFs. That makes this one a fund to consider now—because buying at this point could set you up for 25% capital gains while this fund’s discount disappears.

“Instant Portfolio” Pick #2: Peace of Mind and a Tax-Free 5.7% Payout

The Nuveen Quality Municipal Income Fund (NAD) is not only a great option because of its 5.7% dividend yield but also because of the diversification and low volatility it provides.

Let me explain by comparing this fund to the S&P 500, which we will do with the benchmark SPDR S&P 500 ETF (SPY). In 2017, the stock market famously saw extremely low volatility, steady gains and little fear, which resulted in stocks climbing up and up, with few corrections.

Then 2018 happened.

Fear Is Back!

The orange line here represents volatility in price changes over the last month for SPY, and you can see how the line fell sharply and stayed low throughout 2017.

But this is an aberration. Big spikes, like we saw in 2015 and 2016, are the norm—moments when the market goes into a panic and starts selling shares. The blue line, however, represents the volatility we saw with NAD, a fund with bonds from as diverse places as Utah and New York.

Although the fund’s price swings did accelerate a bit in late 2016, after Donald Trump was elected president (and the market worried about how his tax plans would affect municipal bonds), the blue line stays pretty quiet all the time.

There’s a reason for this: municipal bond values do not go up and down a lot. That means buying NAD gets you steady income without big paper losses when the market freaks out.

That’s why you need to diversify your portfolio so you aren’t forced to sell when the market collapses. With NAD, you can hedge against a market downturn by diversifying beyond stocks and into these low-volatility, high-quality municipal bonds.

And if you’re worried about missing out on gains, don’t be. Here are NAD’s total returns over the last decade:

Strong Gains in a Safe Haven

A 6.8% average annual return from a fund with such low risk shouldn’t be possible. But here it is.

“Instant Portfolio” Pick #3: A 7.1% Dividend From Top-Quality Stocks

Of course, we still need stocks in our portfolio so we can profit from the good times in the stock market—and I see many of those still to come. As I wrote in a March 8 article, stocks are set for a good year, thanks to rising earnings and a better economic environment, and we want to be part of that.

That’s why you should take a serious look at the AGIC Equity and Convertible Income Fund (NIE).

Not only does NIE pay a 7.1% dividend, but it also has an enviable portfolio full of winners, such as Amazon.com (AMZN), Microsoft (MSFT), Alphabet (GOOGL) and Visa (V). NIE is able to turn big gains from these stocks into steady income for shareholders. That’s why the fund has been able to deliver this massive 9.8% average annualized return over the last decade:

Strong and Steady Returns

The fund also makes its dividend safer with convertible bonds. Let me explain.

In addition to shares in the best companies in the world, NIE also buys and trades a group of unique bonds that smaller and riskier companies issue. These “convertible bonds” are a kind of debt with a special agreement that, if the company’s stock rises to a certain level, the bonds will turn into common stock.

NIE buys these convertibles because it gets them a reliable income stream from these companies and the potential upside of owning actual shares in the firm. The fund has a long track record of using these to secure its dividend and provide more capital gains upside for shareholders.

And despite its amazing track record, NIE is selling at a 10.4% discount! That’s why it’s time to buy now.

“Instant Portfolio” Pick #4: A Rock-Steady Corporate-Bond CEF With a 7.3% Dividend

Speaking of bonds, we should also add some corporate bonds to our “instant” portfolio. Not only can we get a 7.3% dividend by doing this with the Western Asset High Yield Defined Opportunity Fund (HYI), but we can also dip our toes in this asset class at a massive 10.2% discount.

And now is clearly the time for HYI to shine.

That’s because the market has turned its back on this fund for too long, despite the recent improvements management has made. Specifically, HYI has focused more on companies that are on the cusp of getting credit upgrades that will raise the value of their bonds. Just take a look at how its discount to NAV has trended over the last few years:

The Discounts Just Get Bigger

The market has sold off HYI in a big way, sending it from an 8% premium to NAV to an 11.2% discount.

And there was a good reason for that back in the mid-2010’s: HYI was not doing well. Its total return was about 17.5% from mid-2010 to 2014, which isn’t great and definitely lagged the S&P 500 over the same period (SPY rose 65% during that same timeframe).

But that’s been changing. Take a look at this chart.

Gains Accelerating for HYI

HYI is up 25% from the beginning of 2016, and its strong gains are just getting started. Why? Because, again, the economy is improving—which means the credit quality of the bonds HYI holds is starting to go up. That increases demand for them, resulting in higher prices on the market and profits for HYI shareholders.

Exposed: The “Billionaires Only” 7.6%+ Dividends You Can Buy NOW

Here’s something else you may not know about CEFs: some of the world’s richest billionaires have been quietly cashing in on them for years.

I’m talking about financial titans like Bill Gates, Bill Ackman and Jeffrey Gundlach, the legendary “Bond God.”

Then there’s Boaz Weinstein, who made a fortune betting against the ridiculous trades of JPMorgan’s so-called “London Whale” back in 2012.

In 2017, Weinstein dropped a cool billion into—you guessed it—CEFs.

Here’s what he had to say about the big profits waiting to be made from these funds:

“You go into it hoping the discount will narrow on its own, but one of the nicest points about this investment is that while you wait, you earn an above-average yield, given the discounted price.”

He also called CEFs “a rare corner of the market where retail investors can get an edge over institutions.”

I couldn’t have said it better myself!

And now is your chance to grab your share of the profits from this exclusive corner of the market.

The 4 CEFs I just told you about are a great start. But right now I’m pounding the table on 4 OTHER funds throwing off fatter average dividends—7.6% as I write—and one of these unsung cash machines even pays an amazing (and growing!) 8.1%.

Better yet, all 4 trade at even more outrageous discounts to NAV, putting you well on your way to 20%+ GAINS in the next 12 months! Throw in that 7.6% average dividend and you’re looking at a fast 28%+ gain here—with a big chunk of that in CASH!

Returns like these are common in the CEF space. No wonder billionaires like Weinstein, Gates and others have silently flocked to them.

Your opportunity to join this “billionaire’s club” through the 4 very best funds in the space is open now. But the weird discounts on these stout 7.6%+ payers are already starting to slam shut, so you need to make your move!

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

The big rebound is on! But don’t worry, your opportunity to grab big gains (and dividends) hasn’t evaporated.

There’s still time!

And you can start with 3 of the 4 funds I pounded the table on back on February 19. At the time, all 4 of these cheap selloff buys were paying a combined 13.4% income stream.

So why are just 3 of these funds still worthy of your attention, only a few weeks later?

I’ll unpack that—and name these 3 top-flight funds—in a moment. First, let’s step back and take a look at what happened in a very wild February, and where it all leaves us now.

A Market Disaster Gets Undone

So much has happened. First, the S&P 500 (SPY) did this:

Was It All a Dream?

The good news is, the stock market losses we saw at the start of the month are now history.

The even better news is that the S&P 500 is up just over 3% from the start of 2018, meaning this market isn’t overheated. That “goldilocks” position should be giving investors more confidence that now is the right time to get back into the game.

It also means time is running out if you haven’t gotten back in already.

And if you’re sitting on cash?

No problem. I’ll show you where to put that cash to work without overpaying too much for the wrong investments.

But before I get to that, let’s take a look at those 4 funds I earmarked in February. They were the PCM Fund (PCM), the Virtus Global Multi-Sector Income Fund (VGI), the Kayne Anderson MLP Investment Company (KYN) and the Dreyfus Strategic Municipal Bond Fund (DSM).

How do these funds look now?

A Quick Improvement

While the warm weather—and a corresponding drop in natural gas and heating oil demand—has weighed on the master limited partnership–focused Kayne Anderson fund, the average return for these picks since I pointed them out, about two weeks ago, is 2.7%, while the S&P 500 is down slightly since then.

In other words, if you’ve heard that buying a low-fee index fund is the right thing to do, just take a look at that chart.

So What Now?

To determine which of these funds remain compelling options, we need to look at their discount to net asset value.

This is where we compare the market price for these funds, which trade daily like normal stocks, and their NAV, which is based on the market price of every item in their portfolios.

Now you’d think an efficient market would make these two figures the same, right? Wrong!

That’s because these are closed-end funds, a little-known corner of the market that’s worth around $300 billion, compared to the multi-trillion-dollar mutual fund and ETF universes. (If you’re unfamiliar with CEFs, click here for an easy-to-follow primer I recently wrote on these cash machines.)

The small size of the CEF market means a lot of big investors who could profit from these inefficiencies don’t bother—and it also means a lot of mom-and-pop investors don’t know these funds even exist.

That’s our opportunity.

The 4 funds I’ve shown you are all CEFs, and, of course, none of them are trading at their NAV (although two do come close):

3 Bargains—and 1 Ship That’s Sailed

First, let’s tackle the PCM Fund, which trades at a 9.8% premium to its NAV, meaning it’s priced above the actual market value of its portfolio. That’s because PIMCO, the fund manager, is great at beating the market, so the market rewards them with a premium.

But a near double-digit premium is too rich for my blood, so this isn’t the best fund to buy right now. And if you nabbed PCM at its unusually low premium earlier in February, you might want to consider getting out or, at the very least, holding on and allocating cash to other investments.

Meanwhile, the Dreyfus Strategic Municipal Bond Fund sports a discount to NAV that has widened since my February 19 article—but investors haven’t really lost any money since I recommended it. How is that possible?

Simple: the fund’s price has slid, but the NAV is staying straight.

Stable NAV, Lower Price

And since investors are still getting the fund’s 5.5% dividend yield, they’re pocketing a strong income stream while they hold on. And since it’s gotten even cheaper, despite the fact that the fund’s real, intrinsic value hasn’t changed, it’s something worth considering if you have cash to spare.

Now let’s hit the Virtus Global Multi-Sector Income Fund and the Kayne Anderson MLP Investment Company. Both funds are trading close to their NAV, and both are paying massive dividends—12% and 10.6%, respectively. So should income investors hold on or buy more?

To answer that question, we’ll take a look at this chart showing where their discounts to NAV stand relative to history:

The Big Picture

This chart makes one thing clear: KYN is now cheaper than it’s been through most of its history, where it tends to trade at a premium to NAV. On the other hand, VGI’s discount, while off a bit from the last few months, is narrower than it usually is.

That makes one thing clear: buying more KYN and waiting for it to revert to its historical mean looks like a smart move, while cautiously adding VGI is also practical, since it’s a strong fund with a very good portfolio.

So if you’re sitting on cash, 3 of these funds still deserve your attention. And thanks to the 500-strong CEF market, there are a lot more out there, too—starting with the 14 I want to tell you about now.

One Click for the 14 Best Funds of 2018

That’s right—you can skim right through all the 500 or so CEFs in the world with just one click and go straight to the 15 funds with the highest yields and biggest gains ahead in 2018 (I’m talking SAFE dividends up to 9.6% and double-digit upside).

All you need is a no-risk 60-day trial to my CEF Insider service. And your timing is perfect, because I’m making a limited number of these trial memberships available now!

Simply CLICK HERE to start your no-obligation trial. When you do, you’ll get instant access to the names, tickers and my complete research on each and every one of the 15 cash machines in the CEF Insider portfolio.

These 15 bargain CEFs all trade at absurd discounts to NAV that are slowly narrowing. That puts unrelenting upward pressure on their share prices and sets us up for a market-crushing gain in 2018!

But the best part—by far—is the dividends.

Right now, the portfolio boasts an average yield of 7.4%. But remember, that’s just the average! Cherry-pick my 3 highest-yielding funds and you’ll be pocketing life-changing payouts like 9.6%, 9.55% and 9.0%!

I hope you’ll take this opportunity to join the small group of investors across the country who are pocketing regular monthly dividend checks from these 15 terrific funds.

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. 

Source: Contrarian Outlook