Are you worried you’ll make the wrong call in this gyrating market? It’s a reasonable fear, with the Dow heading up 200 points one day and down 600 the next—and dark trade-war headlines piling up daily.
But sitting in cash is even more dangerous! Because your stuffed mattress is at the whim of inflation—and that slow cash drain leaves you at a real risk of outliving your money in retirement!
Plus I’ll reveal one weird fund that sets you up for double-digit upside and a huge 7.1% dividend, too.
(A payout like that gives you the ultimate retirement “safety net”—letting you clock out on dividends alone—without having to touch your principal in retirement!)
My forecast might surprise you because it’s a lot different than the fear-mongering you read about daily. I can boil it down this way: now is the time to buy.
That goes double if you’re on the hunt for 7%+ dividends in the one corner of the market where I spend nearly all of my time: smaller closed-end funds (CEFs).
The One Place You Have the Edge Over Wall Street
One thing that sets smaller CEFs apart is that they simply don’t work for big investment banks. These giant firms could buy all of a small CEF’s outstanding shares and, even if the fund doubled, it would barely move the needle on the buyer’s profits!
With the big players sidelined, there’s also a lack of coverage of these funds. And that gives rise to some bizarre discounts we can ride to serious gains to go along with our massive cash payouts. (Did I mention that many CEFs pay dividends monthly?)
The tiny 7.1%-payer (market cap: $225 million) I’ll show you in a second is a perfect example. Before we get to it, let’s get back to why conditions are ripe for buying now.
Here’s What Will Drive the Next Stock Surge
The truth is, despite the sinister headlines, most American companies are still turning big profits. And we can grab a slice of those profits for cheaper than we could a few weeks ago, thanks to the latest market jitters.
Here’s a closer look at what I’m driving at here: after earnings fell in the first quarter of 2019, analysts expected a 4.2% profit decline in the second quarter. But a funny thing happened: as companies reported results, analysts kept upgrading their expectations.
By the end of the quarter, companies had reported just a 0.4% earnings decline, which though it’s a decline, is actually a good news story, as I’ll explain in a second.
Earnings Build for Their Next Leg Higher
Why aren’t earnings growing? For a reason you rarely hear about: 2018 saw some of the biggest earnings growth in American history. In the first quarter of 2018, profits soared 25%. The second quarter of 2018? 25% growth again.
With these massive gains last year, we can’t reasonably expect major gains to come yet again.
But now that we have the tough first half of 2019 out of the way, the second half has more room to show positive earnings growth (and that’s what many analysts expect).
The Other Story We’re Not Hearing
This earnings growth is likely to come from something else we rarely hear about in the press: sales growth that’s still going strong.
So far in 2019, sales for the S&P 500 have risen 5%, far above the 3.7% average sales growth since the Great Recession. This tells us that US consumers still have plenty of money to spend—and US companies will profit from that spending.
If Americans are spending at a higher-than-average rate and company profits aren’t falling, there’s little reason to believe we’re heading toward a recession.
About That 7.1% Dividend …
Put it all together and you get a great time to buy US equities—especially now, before stocks recover from their recent volatility, because they currently trade at a discount.
And you can bag a double discount by purchasing a CEF that’s also cheap in relation to the value of the stocks it owns, like the Nuveen Core Equity Alpha Fund (JCE).
It’s a stock fund that holds a lot of winning companies, such as auto-parts maker O’Reilly Automotive (ORLY), insurer Progressive Corp. (PGR) and surgical toolmaker Intuitive Surgical (ISRG). These are firms benefiting from rising consumer demand translating into higher sales and bigger profits (or, in Intuitive’s case, an aging population).
Plus, the fund’s big 7.1% dividend has been a big driver of its double-digit year-to-date total return—even after recent volatility:
Big Dividends and Big Gains in 1 Buy
Not only is JCE delivering solid returns, it’s also crushing the market. Plus, it trades at a 3.8% discount that will likely turn into a premium as more investors realize this CEF is better than your run-of-the-mill index fund, both for bigger income and superior returns.
— Michael Foster
4 More Small CEFs With Even Bigger Dividends Than JCE (up to 10.7%!) [sponsor]
Now is a great time to buy JCE, but there’s no reason to stop there when there are much bigger payouts available in smaller closed-end funds.
Like the 4 CEFs I’ll share with you right here. They pay rich 8.7% dividends, on average, right now. Plus 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 its payout has skyrocketed 150% in the past decade!
A Rare 10.7% Dividend That Soars
More folks are catching on—which is why this fund has clobbered the market so far in 2019:
Income-Starved Hordes Pile In
And with interest rates headed lower (making my pick’s huge 10.7% payout even more appealing), its gains are just getting started!
Here’s the best part: even if I’m wrong and this fund just trades flat from here, you’re still beating the market’s average historical yearly return in dividends alone, thanks to its 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. Don’t miss this rare opportunity to score them at a bargain.
Click here now and I’ll give you names, ticker symbols, dividend histories and the big price gains you can expect from each of these 4 cash-rich CEFs.
Source: Contrarian Outlook