This “Low-Drama” portfolio is designed for this crash and returns 11.8%

Look, I know this inflation panicked market is frustrating. But despite the endless doomsayer from the pundits, there’s good news: If you’re investing to generate income and you have a long-term time horizon, big dividends (I’m talking about 10%+ returns) wait in the closed area. funds (EFC).

In a second, we’ll dive into three such funds that I’ve put together in an undramatic “mini-portfolio” with a yield north of 10%.

We can thank the sell-off for this opportunity: when stock (and CEF) prices go down, returns go up. And our CEF rebates on net asset value (NAV, or the value per share of a CEF’s portfolio) drop to advantageous levels.

There is no shortage of oversold funds in this market. Today I want to show you three CEFs that offer us a collection of stocks, real estate and high yield bonds at attractive prices.

These three funds return 11.8% on average and have a long history of shareholder profits. Remember that an 11.8% return means $1,180 in annual income for every $10,000 invested, while the S&P 500 at 1.4% only gets you $140. per year on your $10,000.

CEF #1: a diversified CEF bond with a double-digit yield

The Allspring Multi-Security Income Fund (NYSE:) is an 11.5% yielding CEF that is well positioned for today’s market. The fund’s exaggerated decline this year (it’s down about 25% since January at the time of writing) is worth a look now. This table explains why.

Oversold Fundamentals

ERC oversold chart

Over the past six months, investors have sold ERC more than its fundamentals warrant, resulting in a rare discount for this income-focused bond fund.

Consider that the ERC started the year at a 5.8% premium to NAV, and is now trading at a 4.6% discount, which means you get the bonds of the funds for about 95 cents on the dollar.

That means you can buy the ERC now and collect its rich 11.5% dividend while you wait for that premium to return as the market reorganizes for the likely slowdown in Fed rate hikes at the end of 2022 (and the potential rate cuts in the next two years).

What does ERC own? A diversified mix of government bonds from around the world, combined with strong corporate bonds that have been oversold in this panic. Now that the market has priced in more aggressive policy from the Fed, the steep discount and yield on the ERC looks more attractive.

CEF #2: Be the owner and pocket 13% dividends

The next step is the Brookfield Real Assets Income Fund (NYSE:), which is also worth checking out now, both because it is massively oversold and for its exorbitant 13% yield.

This payout is backed by RA’s portfolio of real estate, energy and infrastructure companies, which together own thousands of real estate assets (hence the name) across the country.

This means that if a company or sector goes into trouble, this fund’s portfolio is strong enough to deal with it.

RA shows ‘relative strength’ this year



Even though PR has fallen this year (along with just about everything else), it has held its value well overall throughout the pandemic and is well ahead of the , especially this year – a sign of “relative strength” which I like to see when I buy CEFs.

RA has performed well as it owns energy assets, utilities and infrastructure companies that have been able to charge higher prices as inflation has risen. Top holdings include pipeline operators like Enbridge (NYSE:) and cell tower owners like International Crown Castle (NYSE:).

One thing we need to keep in mind with RA is that it is currently trading at a 10.9% premium to NAV. This is exactly where its premium has been all year, so I don’t expect a major downside as higher inflation continues to push RA’s stock price higher.

But you’ll want to keep this one on a shorter leash and be prepared to sell if the premium drops significantly.

In the meantime, you are well compensated for the risk by RA’s 13% dividend, which has been rock solid since its launch in late 2016.

CEF #3: Big Dividends From US Blue Chip Stout Stocks

Finally, for first-order stocks, let’s look at the Liberty All Star Closed-End Equity Fund (NYSE:), which owns some of the most important companies in the American economy, such as Amazon (NASDAQ:), Alphabet (NASDAQ:), Microsoft (NASDAQ:), and Visa (NYSE:) – all of which have seen their cash flow skyrocket over the past decade and are still generating strong results.

Plus, we can get these companies with a 10.9% dividend that has been rising over the last decade.

Skyrocketing revenue from a high-yield producer

United States Growing Dividend Chart

United States Growing Dividend Chart

Plus, the US has the long-term track record we demand when buying a fund in a market like this, having demolished the S&P 500 since the subprime crisis.

The United States offers significant long-term gains (and dividends)

The United States outperforms

The United States outperforms

In terms of valuation, this one is trading at a kind of “disguised discount”, at a premium of 2.5% which is actually lower than the 5% premium, on average, at which it traded. over the past year. And as recently as April, the US premium was 10%.

Put these three funds together and you have a double-digit yielding portfolio that can help you survive the chaos of the market, thanks to its high average yield of 11.8%, while positioning you for a rise when the markets recover, as they always do.

Disclosure: Brett Owens and Michael Foster are contrarian investors looking for undervalued stocks/funds in US markets. Click here to learn how to profit from their strategies in the latest report, “7 Great Dividend Growth Stocks for a Safe Retirement.”