Michael Foster

This article advocates for leveraging AI's indirect growth through high-dividend Closed-End Funds (CEFs) to navigate a pricey and potentially choppy market. While AI spending is poised for significant expansion, the S&P 500's high valuation makes diversified income streams attractive. Three CEFs are spotlighted: PIMCO Dynamic Income Strategy Fund (PDX), a bond CEF yielding 7.7% with a 10.6% discount, offering stability. Next, the Neuberger Berman Real Estate Securities Income Fund (NRO), a REIT CEF yielding 12.3% with an 8.4% discount, benefits from AI-driven demand in data centers and logistics. Finally, the John Hancock Financial Opportunities Fund (BTO), focusing on regional banks, yields 6.6% and trades at an unusual 3.1% discount, despite a history of strong performance. These funds provide substantial income and diversification beyond direct tech exposure.

The Sprott Focus Trust (FUND), a closed-end fund managed by Whitney George, presents a compelling investment opportunity with a 6% dividend yield and a current 10% discount to its net asset value. George, renowned for his focus on energy and small-cap stocks, has crafted a portfolio featuring a blend of major companies like ExxonMobil and smaller, domestically-focused firms. This strategic allocation has enabled FUND to consistently outperform the small-cap benchmark and demonstrate resilience during market downturns, such as the pandemic's oil price collapse. The fund's rising NAV and a mandate to pay 6% of its rolling average NAV, supported by a robust 14.4% annualized NAV return, indicate strong dividend sustainability and potential for increased payouts, including special distributions. With its discount slowly narrowing, FUND offers investors a chance for both income and capital appreciation.

America's economy is experiencing a quiet boom, marked by consistent, long-term wealth growth despite widespread negative sentiment. Over the past century, each generation has earned more, inflation-adjusted, than the last. Disposable income per worker has doubled in 40 years to over $11,000 annually, and the jobless rate remains low at 4.2%. However, consumer sentiment lags, possibly due to higher inflation expectations and pandemic-era financial memories. To capitalize on this underlying strength, the Liberty All-Star Equity Fund (USA) is recommended. This closed-end fund invests in top US companies like NVIDIA and Microsoft, offering an 11.6% dividend. The fund has shown strong performance over a decade, yet currently trades at a significant 12.9% discount to its net asset value, presenting a potential opportunity for investors seeking income and growth from America's enduring economic expansion.

The traditional "sell in May" investment strategy is questioned, especially for long-term dividend investors. Despite initial worries about an AI bubble and the Iran conflict, markets saw an April rally after AI concerns eased and oil prices fell, though they've flatlined since mid-May. Technology stocks, represented by VGT, soared before cooling but remain resilient. This market pause presents a unique buying opportunity in the Columbia Seligman Premium Technology Growth (STK) closed-end fund. STK's discount to net asset value has widened to 7.9%, its cheapest in over a decade, driven by recent tech volatility. The fund also offers a 3.7% dividend, with a history of special payouts and strong long-term performance, outperforming both the S&P 500 and VGT. This makes STK an attractive option regardless of the month.

BlackRock Technology and Private Equity Term Trust (BTX) is highlighted as a compelling investment, offering a 7.4% monthly dividend well-covered by its 43.8% NAV return. The fund's market price currently trades at a significant discount to its net asset value, presenting a prime opportunity. This situation stems from recent investor nervousness and profit-taking in the semiconductor sector, despite strong underlying demand, particularly for AI chips. While some chip stocks are expensive, BTX holds undervalued leaders like NVIDIA and Micron, which are growing rapidly but trading cheaply. As an actively managed fund, BTX avoids the pitfalls of broad ETFs, offering diversification and a reliable income stream while its discount is expected to narrow.

The John Hancock Financial Opportunities Fund (BTO), a top-performing closed-end fund added in January 2026, continues to impress with its 6.5% growing dividend. This fund has significantly outperformed the S&P 500 and its financial sector ETF, XLF, since its inclusion. Its success is rooted in a bullish outlook on the US economy, which is proving stronger than anticipated, benefiting BTO's regional bank portfolio through declining inflation and reduced credit losses. Despite robust net asset value gains consistently exceeding market price, BTO trades at a 4.1% discount. While currently above its recommended buy price, it remains a core holding, with investors poised to add more on any market dips, reflecting confidence in its long-term prospects.

In December 2025, things looked rough for our favorite high-yield real estate investment trusts (REITs)—and the 8%+ paying closed-end funds (CEFs) that held them.

Imagine a credit fund that yields 15.3% and is built to deliver strong returns in all rate environments.

Investors often learn more from losses than wins. This report examines three of 2026's worst-performing Closed-End Funds (CEFs) with market caps over $250 million to highlight common pitfalls. The Sprott Physical Platinum and Palladium Trust (SPPP) and Sprott Physical Silver Trust (PSLV) both hold physical precious metals, experiencing significant declines as platinum, palladium, and silver slump after a 2025 surge. These funds offer no dividends, compounding investor losses. The third laggard, Oxford Lane Capital Corp. (OXLC), invests in Collateralized Loan Obligations (CLOs). Despite a once-high dividend yield, its stock price has plummeted over 42%, and its dividend was halved in April, with further cuts anticipated. These cases underscore the risks of undiversified metal investments and high-yield funds based on volatile debt derivatives.

Current market anxieties stem from rising oil prices due to Middle East conflicts and the emergence of powerful Chinese AI models like Moonshot AI's Kimi K3. These concerns, however, echo past market fluctuations that ultimately saw strong recoveries, particularly in tech. The underlying US economy remains robust, with Q2 S&P 500 revenue soaring 13.2% and unemployment staying low, signaling strong demand. This economic resilience, despite geopolitical and tech-related worries, presents a buying opportunity. Investors are advised to consider diversified, high-yielding closed-end funds (CEFs). The Adams Diversified Equity Fund (ADX) is highlighted as a prime example, an actively managed fund with a nearly century-long history, consistently outperforming the S&P 500 and offering an attractive 8% dividend yield, currently available at a modest discount.