If you like big steady income, the CEF we review in this article has delivered for decades. And it just got better this year after increasing its quarterly distribution meaningfully. Not to mention, it trades at a compelling discount to NAV which basically eliminates the small performance drag of its very reasonable expense ratio. Furthermore, it provides critical exposure to diversified equity (stock) markets that a lot of income investors frequently miss out on (because they’re overly concentrated in bonds and only a small subset of the equity market). And it does all of this in a highly-disciplined quarterly-distribution approach that allows many investors to “set it on auto-pilot” and sleep well at night.
Big Dividends Report: 200+ Closed-End Funds
If you enjoy digging into the universe of data (to help yourself identify attractive opportunities for further research), this report shares updated data on over 200 big-dividend (technically “big-distribution”) Closed-End Funds (“CEFs”). The data includes a variety of CEFs (including taxable bond CEFs, non-taxable municipal bond CEFs, stock CEFs and more), and it is sorted by market cap (you likely recognize several of your favorites near the top). There is also a link to an Excel spreadsheet with all the data (for those of you who like to sort, slice and dice the data your own way). We own several CEFs on this list in our Blue Harbinger “High Income NOW” portfolio.
Steady Income: 8.4% Yield CEF Worth Considering
If you are like a lot of people: (a) you recognize stocks have been very strong and may be due for a pullback, and (b) you don’t need homeruns from your investments at this point in life, just steady high income and a lot less volatility than the overall market. In this report, we review an attractive 8.4% yield “balanced” CEF with a healthy dose of utilities stocks (known for steady dividends and lower volatility), plus a side helping of bonds (also known for steady income) and a prudent amount of leverage (~25%). It also trades at a significantly lower price premium that it has been (compelling entry point) and pays distributions monthly.
Post-Election Markets: Are You Ready for What's Next?
It’s been a big week for geopolitics and for the stock market (some sectors more than others). In this note, we review the performance of various stock market styles (eg. Small Caps, International, Large-Cap Tech and more), and then share some insights as to whether your personal investment portfolio is positioned corectly for what is coming next. For starters, here is a look at how various stock categories have performed since the election (obviously some big changes)…
SCHD: Big Win Ahead
The Schwab US Dividend Equity ETF (SCHD) is about to create a lot of stock market winners. In this report, we review five reasons why it is a superior strategy for many investors right now (including its volatility characteristics, current market conditions, dividend flows, tax advantages and clear practicality benefits), plus one critical risk factor investors need to consider. We conclude with our strong opinion investing.
Top 10 Big-Yields (November Update) Members
Despite macroeconomic concerns, the stock market has continued to post strong gains this year thereby leaving some investors wondering if it’s time to take some chips off the table. One popular approach is owning attractive big-yield investments (6% to over 10% yields) that will continue to pay high income regardless of what happens in the broader market. In this report, we provide an overview of “frothy” market conditions (e.g. valuation metrics) and then countdown our top 10 big-yields (including BDCs, stock and bond CEFs, REITs and more). We conclude with a critical takeaway that is sadly overlooked by many.
PDI: The Big ROC Bath, 13.1% "Yield"
They often say “you don’t want to see how the sausage is made,” but in this report we are going to look under the hood at PIMCO’s Dynamic Income Fund (PDI) to see how this popular closed-end fund (“CEF”) really generates that big 13.1% “yield” (paid monthly). We put “yield” in quotes because it’s really an artificially manufactured “distribution” that recently included a massive amount of taxable return of capital (“ROC”) something many investors try to avoid like the plague. After reviewing the fund, the distribution and the risks, we conclude with our strong opinion on investing.
Ares Capital: 25+ Big-Yield BDCs Compared (Earnings Season Edition)
Income-focused investors are frequently attracted to business development companies (“BDCs”) for their large dividend payments. And among BDCs, Ares Capital (ARCC) is the stalwart blue chip that leads the industry (and currently offers a big 9% dividend yield). But before you invest in Ares, let’s take a closer look at what they do and how they compare to peers (especially ahead of this upcoming BDC earnings season). In this report, we review the business, the current market environment (especially fixed-versus-floating interest rate dynamics, plus rising non-accruals), what we like and don’t like (i.e. risks) and then conclude with our strong opinion on investing.
Update: Top 10 Growth Stocks, Disciplined Growth Portfolio
Climbing the Wall of Worry: The S&P 500 was up another 1.5% this week (and now +22% year-to-date) despite major jitters over the US election in just three weeks. We have updated our Top 10 Growth Stocks and our Disciplined Growth Portfolio to reflect new opportunities and continuing confidence in the long-term economy (despite a never-ending drumbeat of short-term naysayers). If you are looking for two minutes of fame, go ahead and hide in cash until the next market correction (which may be in two days, two years or two decades), but if you are looking to keep building long-term wealth, the ideas in this report are absolutely worth considering.
Albemarle: Lithium Supply Cycle
This lithium miner (with a strong tie in to electric vehicle batteries) has gone from “loved” (at over $300 per share in 2022) to “hated” (now trading at around $100). But what many investors may not fully appreciate is the massive lithium supply cycle swing, which now places Albemarle in an interesting position going forward. In this report, we review the business, the lithium supply cycle, current market dynamics and risks. We conclude with our strong opinion on investing.
Eli Lilly: The Bull Case is Compelling
Despite the recent “dip” (shares are trading 20% below recent all time highs), Eli Lilly remains a very attractive company and compelling investment opportunity (e.g. blockbuster weight-loss drugs, wide moat, massive growth, attractive valuation). In this report, we share the bull case (plus a few bear case arguments, for balance). Let’s get into it.
Quick Note: New Purchase (Disciplined Growth Portfolio)
We added a starter position in this high-growth mid-cap stock. The share price has significant momentum and so do the underlying fundamentals of the company. The company’s new AI-powered mobile solution (released ahead of schedule on Thursday 9/26) should keep revenues growing rapidly as it's purpose build for today’s marketers.
AI-Powered Marketing Software Stock: Disruptive Growth
The Artificial intelligence revolution is still just getting started, and some industries are set to benefit more than others. For example, the AI-powered marketing software company we review in this report has a lot of momentum right now, including rapidly rising revnues, a large market opportunity, competitive advantages, a compelling new mobile solution, healthy financials, solid leadership and new tailwinds from lower interest rates. After reviewing the company, including opportunities and risks, we conclude with our strong opinion on investing.
Despite Big Risks, 14.2% Yield BDC Worth Considering
BDCs are often an income-investor favorite because of their large dividend yields. And the BDC we review in this report stands out for its 14.2% yield (which is larger than many peers). However, the higher yield comes with higher risks (for example, net investment income just barely matched the dividend last quarter and the 0.88x price-to-book value suggests the market may be beginning to price in a dividend cut—especially considering 85% of their investments are floating rate while they also have a signifcant amount of fixed rate debts of their own). In this report, we reveiw the BDC and conclude with our opinion on investing.
New Purchase: Disciplined Growth Portfolio
Quick Note: We have added back shares of this “fallen angel” AI stock mainly because the risk-reward and valuation metrics appear very compelling, despite high uncertainty and high short sales. The share price could get worse before it gets better, but if you like to buy profitable high-growth businesses with a long runway for growth, this one is compelling.
Big-Yield BDC Comps: ARCC, MAIN, OBDC, OCSL
A lot of income-focused investors are attracted to BDCs for their large dividend yields. However, not all BDCs are created equally. In the following table you will see comparative data for top BDCs, including the percent of investments that have fixed-versus-floating rates, the percent of debt they have that is fixed-versus-floating rate, price-to-book value, current dividend yields and the percent of first lien loans they have made as investments.
Blue Owl Merger: BDC Storm Clouds Ahead, 11.9% Yield
The recently announced merger between Blue Owl’s two publicly-traded BDCs (OBDC) and (OBDE) is a warning sign that investors should heed. In particular, the combination between OBDC (flagship) with OBDE (slightly-more-conservative) is a precautionary step. Here is how we expect it to play out for Blue Owl and for the BDC industry in general.
High Income NOW Portfolio Update
High-Income NOW securities have performed very well over the last 1-2 months as they often do during bouts of market volatility (as we have seen for stocks in general over the last 1-2 months). The High-Income NOW Portfolio and Top 10 Tear Sheet have been updated, with no major changes, but some important commentary below.
Thermal Barriers Company: Growth Accelerating on Government Regs, OEM Wins
PDI: The Case for Bond CEFs, PIMCO Leads
If you have been invested heavily in the stock market for the last few years, congrats—you’ve made a lot of money. But if your stage in life suggests now is the time to “de-risk,” your options might seem limited. In particular, bonds (the traditonal de-risking methodology) currently offer low yields (for example Vanguard’s popular bond ETF (BND) only yields 3.4%) and rates may be about to go even lower (i.e. the fed seems ready to cut). One bond alternative that offers several unique advantages is PIMCO’s 13.9% yield Dynamic Income Fund (PDI). In this report, we review the advantages of bond closed-end funds with a detailed focus on PDI. We conclude with our strong opinion on current bond CEF opportunities and PDI in particular.