This fund has paid a dividend of 0.085 every month now since since February 2009. At the current rate of 0.085 a month ($1.02 per year) and a price per share of $8.48 the annual yield is 12%.
Most other high yield funds seem to be in the range of 8% to 10%.
With all the retirees out there desperately looking for income it is surprising to me that more people haven't discovered this fund. I had a bank CD that came due this week. The bank was offering 0.002% for a one year renewal. I'm not pumping this fund. Just a bit puzzled that more people haven't bought in and bid the price up.
While I like and own several PIMCO closed end funds, NCZ is probably going to cut its dividend in the next six months. The Semi Annual report shows Net Investment Income per share of .079534 versus the current .085 dividend. The Undistributed Net Investment Income (which is used to make up for shortfalls in Net Investment Income) is a negative -.081773. No way the current dividend can be sustained. Look for a cut to .075 after the first of the year.
Riambeer, just for the sake of discussion, let's say you are right and they cut the dividend to .075 a share. At today's closing price that is still a 10.97% annualized rate of return. I think I can live with that.
But two things to consider. First these annual and semi-annual reports often aren't what they appear to be. I'm not an accountant and I don't fully understand them. But I've had funds where I thought I was safe because their reports were showing a high enough income to meet the dividend and a comfortable cushion of UNII and then suddenly without warning they cut the dividend. And on the other hand for a while I owned PHK and PGP which shouldn't be able to maintain their dividend and yet they did for years. And second, while I don't understand all the accounting, and while there is the risk of a small dividend cut, it seems to me that when the earned income is so close to the dividend pay-out and when the fund has a history of not cutting, it doesn't seem like too large a risk to take for 12%.
I don't disagree with what you are saying. As always with stock it is a question of risk vs. reward. Very few funds from reputable companies have this high a rate of return. You take a calculated risk to get 12%.
Number one it's not a Pimco fund, it's an Allianz fund. For that matter, Pimco is an Allianz fund as well. And while a div cut is possible, it's not a certainty. They could always lever up a bit and cover the current div.
I was alway in cd's because of the fdic . However, since 2002 I have owned bonds, closed end's, and a few stocks. If one follows a few funds closely for say a year, one can find all they need to know . usually a large capitalized fund will be safe providing its held untill it can be sold at cost or at a profit. Buying at the lowest range of its price helps too. I haven't seen a closed end fund go insolvent yet