again that I agree that FAX has disappointed me to and I bought it at 5 7/16, watched it go to 6 7/8 and back down again. But it is my understanding that FAX has not paid their dividend from operational earnings since the last rights offering was completed; In fact they stated as much that the .72 through March was based partly on capital gains. Well, with rising interest rates, FAX has seen the underlying market value of their bonds decrease and have had no opportunity to generate additional capital gains through portfolio turnover. Thus, income from investments remains static and their capital gains are about spent; And guess what, we can probably expect a dividend cut.
There is chance that the dividend cut could be temporary if interest rates fall which could put FAX in a position to once again start generating capital gains through portfolio turnover; but I wouldn't hold my breath. It's more likely that FAX will have another rights offering to generate more cash to invest which would dilute our share NAV just like before. Just another cycle like we have just experienced. If interest rates would have fallen even more, which some were predicting, the capital gains flow would have continued and the dividend would have been safe. I can remember predictions that the long bond would go to 3.5% about the same time that FAX was completing the rights offering. We all know now that didn't happen. However, there are those that predict that long bond rates will be under 6% by year end.
Also, don't forget there is one other wild card, and that is the Aust.$.
that you see no hope for any stability or gain. Is that corect? If so, IYHO, should we just take our licks and get out? Just read a neat article by Paul Sturm in the Feb. issue of Smart Money. He advocates CE municipal bond funds because of their deep discount. One, a high quality, insured...is paying a taxable equivalent of 9%. Thanks for your thoughtful replies. I have just started using the net and have discovered the Dividend History feature in Yahoo. If I had had that at the time I bought FAX, and seen the declining dividends, I would not have bought.