Boost Dividend Income with AI via High-Yield CEFs

“Dividend investors keen on tapping into the AI revolution without sacrificing their income goals have a compelling avenue: tech-focused closed-end funds (CEFs). These funds offer attractive yields, often exceeding 8%, and provide exposure to a diversified portfolio of AI-related stocks. This strategy allows investors to benefit from the growth potential of AI while maintaining their income stream.

One such CEF, the Liberty All-Star Equity Fund (USA), stands out for its impressive 10.2% yield. Despite its inception in 1987, well before the internet era, the fund has adapted to the times and delivered exceptional returns, exceeding 2,900% in total return. USA’s portfolio includes tech giants like Microsoft (MSFT), Amazon.com (AMZN), NVIDIA (NVDA), and Alphabet (GOOGL), comprising 22% of its holdings. Additionally, the fund holds positions in companies poised to benefit from AI integration, such as Visa (V) and Charles Schwab (SCHW).

For investors seeking a more aggressive play, the Neuberger Berman Next Generation Connectivity Fund (NBXG) presents an intriguing option. Trading at a discount of 16.7% to its net asset value (NAV), NBXG offers a unique opportunity to invest in AI’s supporting infrastructure. The fund’s portfolio includes companies like Monolithic Power Systems (MPWR) and Applied Materials (AMAT), which are essential for energy-efficient AI systems. Moreover, NBXG pays dividends monthly, providing investors with a steady income stream.

Both USA and NBXG are poised to benefit from the expected drop in interest rates, which could further enhance their appeal to income-focused investors. By investing in these AI-focused CEFs, dividend investors can potentially capitalize on the AI boom while enjoying substantial yields and mitigating risk through diversification.”