As an owner who is down 50% on this, I am curious if the dividends are strictly being paid out of the actual dividends or is this a return on capital situation?
I am considering adding more, but still can't get a handle on the ridiculous yield.
Re: NONE can give a REALISTIC/BELIEVABLE explanation on how ADVDX gets that yield.NOT POSSIBLE WITHOUT RETURN OF CAPITAL PERIOD.
From Street Authority: The dividend-capture strategy is the act of purchasing a security for its dividend, capturing the dividend, and then selling the security to buy another about to pay a dividend. By doing this, investors can receive a steady stream of dividend income instead of waiting for an individual holding to pay its regular dividend.
To understand the dividend-capture strategy, investors should be familiar with the ex-dividend date. In simple terms, it is the day new buyers of a security are no longer eligible to receive the upcoming dividend. Investors looking to capture a dividend must buy the security prior to the ex-dividend date to ensure they are a shareholder of record when the dividend is paid.
Investors using a dividend-capture strategy will simply buy the stock prior to the ex-dividend date, ensure they will receive the payment by holding the security until the ex-dividend date, and then sell the security. In theory, they should be able to quickly buy and sell a number of securities near their ex-dividend dates and capture numerous dividends. However, in practice this is not always the case.
First, whenever a firm announces a dividend, often the share price will ramp up prior to the ex-dividend date to factor in the payment. Thus, investors buying after the dividend announcement and before the ex-dividend date often pay a higher price for the security.
Once the stock "goes ex-dividend," the price usually falls to reflect the value of the dividend payment since after the ex dividend date, buyers of the stock or fund will not receive the upcoming dividend. These actions result in a higher buy price and a lower sell price in many circumstances.
Read More: http://web.streetauthority.com/terms/d/div-capture.asp
Yahoo isn't always up-to-date. The NAV ALWAYS drops by the amount of the dividend on the XD date, whether Yahoo (or other sources) report it or not.
The NAV can drop more, or less, on the XD date because of price changes that day to the stocks held in the ADVDX portfolio. Whatever the NAV change on the XD date, it still reflects a drop of the dividend amount to be paid that month. You can figure out the true gain or loss for that day by adding back in the amount of the dividend.
Mellow, I noted there'e some nice price swings on this....I'm wondering if anyone on this board has tried to trade it on a regular basis....I know the fund is set up to penalize one for doing so....but does seem to offer a potential way to earn oneself out a hole! Good Luck
You're going to get a 1% fee imposed selling <60 days. You'd be better off trading AOD since it's a closed-end exchange traded fund you can access anytime the market is open. Then, all you'd have to pay is 'round trip commission. No free lunch though as AOD is still trading at 26% premium to NAV. I guess if you're using it as a trading vehicle, the NAV is of no importance.
According to the ADVDX Prospectus (which can be found on the Alpine ADVDX website), the dividends are strictly that --- dividends and not return of capital. These dividends are qualified, in accordance with IRS regulations, because the stocks held in the ADVDX portfolio are held for 61 days minimum to qualify.
At year end, ADVDX may declare a special distribution that could include return of capital. However, for 2009, there will be no special year-end distribution, according to posted announcements from Alpine.