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Deutsche Multi-Market Income T Message Board

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  • Reply to

    KMM Is A Buy

    by alw59saw Oct 20, 2014 6:53 PM

    As interest rates rise, so will KMM's income from newly acquired bonds. Falling bond prices won't affect KMM since they aren't a bond, but a stock --- and stock prices usually rise as bond prices fall and income rises. Investors don't watch portfolio value of this stock as much as they watch the stock price and income from bond interest (which will rise in future years).

    As portfolio bonds mature (at lower interest rates), that cash will be re-invested in acquiring higher-yield bonds, Interest income from the new bonds rises to improve cash flow and net income. After a few quarters of that cycle, KMM will begin to raise it's dividend again, as it has in the past. Just follow its historical cycle.

  • Reply to

    KMM Is A Buy

    by alw59saw Oct 20, 2014 6:53 PM

    OK. I hold a lot of shares, but how do you account for: 1) rising rates impacting their borrowing costs as they are 33% leveraged, and 2) the values of their existing bonds falling as rates rise? Just wondering.

    Sentiment: Hold

  • I've tracked KMM for more than 10 years with my patented analysis system. KMM is now a good BUY for those interested in bonds/bond funds. While it will be a few years in coming, as interest rates rise, so will the income produced by bond holders (such as KMM, as the replace lower interest corporate bonds with higher yielding ones). That fact will likely cause KMM to increase its dividend (now yielding 7.6%), which in turn will lead to higher stock price for KMM.

    So, buying now will likely produce a CapGain and higher yield down stream (probably 18 months - 2 years).

8.470.0000(0.00%)Dec 26 4:01 PMEST

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