Where do I start here, this message board is as good as any...One of my goals is to have enough income from dividend producing stocks to replace my salary, i.e have enough capital up fronth so that it is not only my wages, but also my pension going forward, aslo I can pass onto my kids as their wages when I don't need it any more. I use telechart to list all 7000 stocks & ETF's and sort by dividend, I look for price going up long term on chart and 10% of greather dividend, and then read up on stock/etf. I like the monthly paying ones as it simulates my pay check. Where I am having the problem with is the stock/etf continuing to pay, i.e. if the EPS is less that the Div. Yield. how does the company pay mroe that it is earning, of is the dividend paid before the EPS number is printed. and number 2) is the amount of primary capital, it is much less if the company is paying 15% vs 10%. Anybody else of the same mind set, here are some of the funds I use, DSU, EMF, ZTR, EOS, PFL.....etc. Sorry for the longwinded discussion, but not sure how to open it up other than this...
Hi, I wish I had seen your posting back when you had originally posted it bcause I own, or have owned, 3 of the 5 funds you have listed here. I'm actually having two of them analyzed right now by a professional at no small price to me. What I have learned about closed end funds over the past 3 or so years is that they are not nearly as stable as I had originally thought. Largely because they can't adequately control intrinsic stock price flucttuations to the downside or predict reqired redemtions needed to satisfy sellers---all-the-while maintaining their stated dividend payout. As one comment stated, once a CEF begins to distribute capital it is likely a good time to shop for a new fund. But I have found--with ZTR to be exact, that even though they have succesfully maintaine thier 10% anual payout, and have not returned capitol--that I awware--they have lost significant NAV and Market price since my entry point largely due to the two reasons I listed above. I am deciding right now whether to be patient and ride out the storm in hopes that they will be able to successfully attract new money as the market recovers, or whether it is time to simple cut my loses now and move on. Any info you have discovered since you originally wrote this comment would be welcomed.
Correct me if I am wrong,but the answer to your question is dividends ca come from three sources, earnings,and or capital gains, and or return of investment (taken from your original investment.) The company usually discloses where the dividend was paid from. The worse case is the later return of investment.
This thread has much sound advice. However, the discussion would be
incomplete without mention of inflation and the possibility of an
increase in interest rates, specifically a move into stagflation.
Just something else to consider.
Hi, Most of the answers to your questions involve the Net Asset Value(NAV). An example would be EMF. The symbol for its NAV is XEMFX. A lot of closed end funds use this symbol structure. Also, do your DD and find the funds distribution policy, if they have one. If a fund if paying return of capital for an extended period of time it may be time to get out. Closed-end funds are a good investment but require maintenance.
EMF may not pay a distribution until next November so if you are looking for a monthly payout funds like EMF is not for you. As you know there are a lot of funds out there so chose wisely.
Hi, This thread has some excellent advice on it. As for monthly income you could look at funds that may generate as much income but are more secure. As an example-DNP has paid $.065 for the past 10 years and $.06 for the 10 years before that. I have had it for a long time. It pays about 8% on my investment not much on captial appreciation. However, as I have said, always keep an eye on these funds. Part of DNP's distribution is a return of capital.
some of the funds you listed have annualized returns around 10%. Any fund not returning more than 15 shouldnt even be considered because simply buying the S&P 500 index fund, historically over 100 year period has averaged returns greater than 15%. Not to mention that dividends get taxed heavier. So if you're looking at a fund that returns less than 15% on dividends, the capital growth of the stock should be at least 4% on top of the dividend payouts.