I'm confused and from the posts I've read, so are at least a few others. Let's pretend that all the stocks that AOD holds or will hold remain at the same price they are today for 3 years and that they continue to pay this $0.18/month "dividend" for that period.
I think it's fair to assume for sake of argument that the actual annual dividend paid by the stocks held is 5%. So if the NAV today is $12.38, the NAV in three years would be
0.05 x $12.38 x 3 years + $12.38= $14.24
$0.18 x 36 = $6.48
equals a NAV of $7.76 in 3 years.
If the market goes up, NAV will be higher, if it goes down, NAV will be less. I see no way to get around this.
Unless the stocks they hold pay 17%, the NAV cannot be sustained.
Pooping around with timing of dividend capture simply can't work long term, imo.
Any other long term result makes no sense to me.
I totally agree that this stock will REBOUND but it will take a little bit more time until the overall stock market improves!! We need more energy independance! If we can put a man on the moon in less than 10 years I know that we can do the same with energy independance - no IF's, AND's or BUT's!!! Boone Pickens is correct in his plan and we need to get it implemented NOW, not 1, 5, 10 years down the line when we've sold off most of America's business's! We're crazy and the Democratic led CONGRESS, having just gone on a 5 week vacation, is setting their USUAL example of leadership!!!
you are right on! monthly divs on aod will continue to be paid! at some point aod will bottom with the rest of the market and level off...maybe it has already and then while it sits around we collect each month. the real bonus kicks in when it starts to recover ....and contrary to many posters on this board it WILL RECOVER!
i have no problem with the .18 dividend now im new to aod and bought in at 11.90 and 12.05 for an average under 12. i can live with taking my 18 percent per year in cash and even if the stock doesnt move much for the next 6 months i would be happy. if it does more any i will make over 20 percent and if they pay capital gains even more at the end of the year.
I seriously doubt that they will cut the dividend. In addition to dividend capture, they also do special dividends. Jill mentioned on the last call as an example the upcoming $10 TWC dividend. She will buy a stock like that, get the special dividend and lose it in NAV (at least most of it), but she can then legitimately claim that the distributions are all earned. There is no reason to cut the dividend. The only question is what the total return will be, factoring in the change to NAV from all the ex-dividends. In a better market, she will do fine. Sector selection is also key and she seems to have made some mistakes.
Interestingly, she was picked best Income Fund manager for the second year in the current Barron's/Value Line survey based on the performance of the open end fund. Her methods can work, they just don't always do and she is in a rough patch now. But I don't see the dividend being cut. Another bonus in December is much more likely than a cut IMHO.
I am not "sticking around" with AOD. I bot at $13.35, collected $.18, and sold at an average of about $12.78, for a minor st loss when I realized the stock really didn't make sense.
I'm "sticking around" in the chatroom because the ideas others have (including you) and the stock itself are interesting.I agree with several contributors regarding dividend reduction and am now convinced that my earlier feeling that they have to be selling stock to maintain the outrageous dividend was correct. They must announce a significant reduction in the dividend in the near future.
I'd like to hear what other posters would do if AOD reduced the monthly dividend to say $.08 or &.09. Or, what if they announced a quarterly dividend of say $.25? A quarterly instead of monthly div might cause additional fear for investors because a lot can happen in 3 months so its more comfy to get monthly $.
I think future investors would welcome an announcement of dividend reduction, whether it's accompanied by a change to quarterly or not. I suspect the big boys (the knucklehead who sold a Milliom $ worth in one day, for instance) are waiting for this and would buy in droves on a small dip in price the day after the "bad news". I am going to watch for this and be ready to buy on a price drop in reaction to a more realistic payout.
Sentiment: Wait and Buy
"If you can't stand the heat..." I agree. As with most funds this on did great in the bull market and has taken its lumps in the bear. NAV has declined a lot because the fund had a high weight in financials which it recently reduced in favor of energy I assume to avoid dividend cuts. They also lightened up on foreign stocks. However they have managed to retain the dividend and consistently paid high yields.
If you feel the dividend capture model is defective why stick around? I feel te present low price is a good chance to average down. When the bull returns the asset value will go up.If you look at individual stocks and other funds you can find similar losses due to the market. I added a thousand shares the other day and will add more on dips.
As to cutting the dividend, that seems rank speculation but, if they do, it should still be a high yielder. You have to hold this over time to get the benefit of high yield investing and averaging down should also help.
A year or so ago this was regarded as a jewel and was selling at a premium to NAV, probably overpriced then. Now it's seen as a dog and often sells below NAV and is probably underpriced now.
All this gloom indicates to me that we are getting closer to a bottom in AOD. RRW
Those who disagree with you are "crying, whining, and bitching"?
Should there maybe be two AOD forums? One for those who love AOD (or at least who want others to buy), and another for those who are concerned about the stock (or at least want others to sell).
Are you Larry Kudlow?
A strategy that looks good on paper isn't always that easy to execute. A DIV capture strategy implemented in a generally benign or rising market holds promise if you have a truly great portfolio management team. Too much trouble for most of us.
I did a quick review of the "latest" 114 holdings of AOD. While they are good name stocks, only a handful have a payout greater than 5%. Hard to capture 18% with that and maintain NAV. And, as I said before, who knows what's in the portfolio today? I suspect that the AOD managers simply rotate the same stocks in and out, and hope for a little recovery after x-div. (As noted before, not working too well right now.)
With the 40% decline in NAV, we now need a 66% gain just to get back to $20. Not looking good for the foreseeable future. Looks like a risk vs pain situation for a while. That said, AOD actually does hold a portfolio of solid stocks that could hold up their value. But, they'll have to discontinue their churning for that to happen. And, of course, that pretty much does the dividend in.
Not jumping in yet.