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Alpine Dynamic Dividend Institutional Message Board

  • mysonchino mysonchino Dec 15, 2010 1:08 PM Flag

    Bond fund opportunities

    I currently hold WEA and PPT. They have both come down considerably in the past several days. Both now sell at discounts and yield 9.5 and 11.5%. Both reported 100% of income distributed last year was "earned". PPT is 54% investment grade and 70% BB or better. WEA is 65% investment grade and 75% BB or better. WEA is domestic, PPT is 50% global. An equal investment in both funds pays a 10.5% dividend paid monthly.

    If you are an income investor and are not concerned with market values this is a great time to have extra money. Of course 6 months and 18 months from now may be better. Personally I don't try to pick a bottom for income investments. For example if bonds drop another 10% on NAV the revenue generated on a $50,000 investment increases from $5,250 to $5,775. Of course if you wait a year to jump in and are sitting in cash you miss out on $5,250 of income and then have to hope you guessed right.

    In my opinion for retirement,if you can live only on the interest, any time you can obtain a premium sustainable yield by investing available cash, do so. Dollar cost average in as future cash becomes available and don't worry about market values. Of course if you are in a position where it may be necessary to liquidate assets to generate cash this is not a golden rule. But for those who can retire only with cash flow it is a stress free way to build and increase income over time. For me, it's all about income. I live the same whether I earn 9% on a million or 4.5% on 2 million as long as the cash flow is sustainable.

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