These Funds Tap The Crypto Crash For 11% Dividends
At Contrarian Outlook, we’ve been talking a lot about crypto lately—but not in the way you might think.
We’re not buyers—far from it! Instead, we’re using a savvy, dividend-focused strategy to set ourselves up for some nice gains (and dividend payouts!) as gamblers flee crypto and speculative tech stocks. (I’ll spotlight two closed-end funds that are aligned to scoop up our “crypto refugees” while handing us dividends yielding up to 11% in just a moment.)
I’m reminded of crypto right now because many of these “coins” have fallen hard recently—and last week, we got word of one that went essentially to zero!
Now, as you can see from Coinbase and most other cryptocurrency exchanges, trading of Terra/Luna is no longer supported. That $1.6-billion market cap at which the coin is currently valued? It doesn’t exist. Because the currencies are no longer supported, and Terra has been shut down, anyone who still has one of the 6.5 trillion Luna coins in their cryptowallets will find that they can’t use them or exchange them for cash.
Build Lasting Wealth With 6%+ Yielding CEFs
Obviously, anyone who went all in on Terra/Luna isn’t someone we expect to move into CEFs—they’ve lost all their money! But many other (former) crypto and NASDAQ
This is where the two CEFs I mentioned a second ago come in. They’re good examples of the kinds of funds that would appeal to our crypto refugees: the Liberty All-Star Equity Fund (USA) and the Gabelli Dividend & Income Fund (GDV). A couple of years ago, they were yielding 10.4% and 7.9%, respectively.
Since then, GDV’s dividend has stayed solid (it now yields 6.1%) and comes your way monthly. USA, which pays quarterly, has seen its dividend rise by nearly 30%, for an 11.1% yield.
These funds have also seen the value of their portfolios rise strongly since then. And while both are down from the all-time highs they hit late last year (as, it should be noted, is just about everything in the market), both are still up a solid 50% in just two years. And unlike cryptocurrencies, these funds’ assets have actually grown!
As you can see, these funds’ liquidation values have gone up over the last couple of years, thanks to actual fundamental gains in the stock market, generated by the rising cash flows and future earnings potential of the companies these funds hold.
Speaking of their portfolios, the management teams at both of these funds have done a nice job of positioning them for the current market. USA, for example, holds Alphabet (GOOG), UnitedHealth Group
GDV, meanwhile, holds Microsoft
In other words, GDV and USA offer big dividends and growth potential backed by real companies making real profits by providing real goods and services. That’s about as far away from the crypto casino as you can get, and it’s a good example of how high-dividend CEFs are always a better choice than speculations, no matter how big the historical gains of said speculations might be.
Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report “Indestructible Income: 5 Bargain Funds with Safe 8.4% Dividends.”