Crypto-sellers should flock to this 7.3% dividend

Crypto is a mess, and many (former) crypto fans are finally Realize that stocks in companies that make goods and services people actually want – and pay dividends – are the place to be.

Of course, it is no secret to those of us who know of private equity (CEF), many of whom own these companies and pay us rich dividends, often with returns north of 7%. For us, crypto is just the latest “investment” that kept the promise of building wealth faster than “boring” stocks could ever – and failed to deliver.

You may have even heard that crypto is a great inflation hedge. Everyone who bought Bitcoin based on that idea is now struggling 71% + inflation as their money literally disappears before their eyes!

I guess Bitcoin holders can find some (cold) comfort in the fact that they did not go big on the thousands of cryptocurrencies that have gone to zero, such as Terra, eBit, San Coin, Lucifer Coin, Meta Legends, RhbCoin or OneCoin.

If anything, it seems pretty clear that betting on crypto was just that – betting. More than half of Bitcoin investors have lost money, according to one study, while another puts this figure closer to two-thirds.

These losses are unlikely to reverse soon either. Too many potential buyers are turned off as they see more evidence of market manipulation, an increasing number of lawsuits against crypto sellers and more crypto exchanges that close (Crypto.com, Cryptopia, Coinnest), and lose customers’ money (Binance, Africrypt, Mt. Gox ) or refuses to let clients withdraw their money (Binance, Celsius).

While some cryptocurrencies may recover in the future, right now it seems that the promises of Web 3.0 are empty, and investors who want to have money for themselves and the future must look elsewhere.

Why stocks – and 7% + give CEFs – always win over speculation like crypto

The crypto massacre stands in stark contrast to the stock market, which over the past 33 years has given investors an impressive 9.7% annual return, on average, even after the last downturn.

This is because equities are an investment in companies that produce and sell actual goods and services that are in demand, including, somewhat ironically, the powerful computer chips that cryptocurrency miners needed to keep the crypto infrastructure going.

And if you buy now, you are buying at a time when stocks are oversold due to market panic over rising prices. And buying in a downturn has traditionally boosted long-term returns: buying at the bottom of the 2009 market dive, for example, would have increased an investor’s return from the historical average of 9.7% to 12.6%.

Even if you do not times the decline exactly (because let’s be honest, no one can do it consistently), you will still increase your long-term return just by buying during a pullback.

Now, here’s the cherry on top: we can buy Nuveen S&P 500 Dynamic Overwrite Fund (SPXX) and get S&P 500 exposure, plus a dividend yield of 7.3%, thanks in part to the fund’s sale of call options (a type of stock insurance, which SPXX sells in exchange for cash).

Because it has all the stocks in the main index, you get the most important companies in America, included Microsoft (MSFT), Amazon.com (AMZN), Goldman Sachs (GS), Bank of America (BAC), Visa (V) and Alphabet (GOOGL) –companies’ cryptocurrencies have failed to replace. These are companies whose cash flow and profitability have increased, even during the recent market breakdown.

Buying SPXX during a downturn is smart: those who did so during the COVID-19 sale have almost doubled their money in just over two years, while at the same time collecting the nice revenue stream of 7.3%.

You do not need crypto, or the risk, fraud and loss associated with it, to achieve true financial independence. All you need is a long-term plan and strong, high-yielding funds like SPXX.

Michael Foster is a leading research analyst for Kontrarian Outlook. For more great income ideas, click here for our latest report “Indestructible income: 5 bargaining funds with a safe 8.4% dividend.”

Disclosure: none