The NAV at close today is $4.72 and the assets under management are $612.40M. Dividing those two numbers ($612.40M/$4.72) that means there are 129.7M shares outstanding. It also means the fund must earn at least $9.1M next month in order to pay the next .07cent dividend (.07 x 127.7M = $9.1M). Actually, a bit more than $9.1M due to fund expenses.
Can it be done? $9.1M divided by $612.40M is 1.5% .... a pretty big number for just one month of dividend income.
The dividend capture method is supposed to make this possible. I wish I had a better understanding of the turnover rate statistic and how much it increases dividend income.
I hope I've done these calculations correctly. Let me know if I didn't.
There appears to be a way to find out if there is net buying or net selling of ADVDX. For the next month or two I plan to calculate the number of outstanding shares at the end of each week. If the calculation next friday is greater than 129.7M shares I think that means there was net buying of ADVDX, if it is less, there was net selling. I don't know if historical data like this is available.
I mentioned in my first post the dividend capture method is used to generate the ADVDX dividends. I look at it this way. If the fund managers capture 6 dividends per year, instead of 4, that is the equilivant of a fund 50% larger than $612.40M that captures only 4 dividends. It's much easier to earn the $9.1M with Net Assets of $918.6M than $612.40M. Unfortunately we don't know if 6 is correct. It may be more or less than 6.
And there is another way they may be using to earn $9.1M in dividends next month.
From Sept 2008 to May 2009 the fund managers may have bought a lot of stocks at greatly depressed prices and very high yields, 15% or even higher. There were a lot of them available during that period. What if they still own those stocks! Those stocks, in combination with the dividend capture method, may make it possible to earn $9.1M in dividends next month. To find out if they own a bunch of high yielding stocks I need to compare the entire portfolio from last March to the current one. I do recall that Regal Entertainment was listed as a major holding for many months. Unfortunately, Yahoo only lists the top ten fund holdings and nothing about the portfolio last March.
You've posted more of the math that I was getting at in my response to our resident critic in other threads. The dividend "yield" is secondary to the actual cash dividend payout each month in that we all have a different "yield" depending on our cost basis. What counts most is the cash needed to produce the actual dividend and how much is that per share.
Something to keep in mind is that an open end fund could follow a common CEF strategy and pay out with a return of capital in a particular month if they believe they will have sufficient investment income in the next dividend period.
Another way to think of that is that Jill doesn't really have to produce .07 cents a share or $9 million in income next month, but she has to produce .84 cents of income per share through the year plus whatever realized capital gain the fund can tack onto that each quarter.
Of course a ROC is going to eat into the NAV, but again, it all depends on the underlying investments and the confidence the manager has in their performance And the manager can be wrong! That's why there is risk in ADVDX. If anyone thinks that their dividend is locked in forever with no risk then that's pretty foolish. It's why I am prepared for a dividend cut.
But you're absolutely right that the question is, Can Jill produce roughly $110M in income in a year using what is now around $612M in assets (equities and cash)? That is a tall order, but she has done it twice in the six year history of the fund.
Good post Fred. That was exactly what i was trying to get at in a couple of posts i made a few months ago.
In a rising market 23% percent yield would be difficult to achieve without ROC but possible.The managers would need to be VERY skilled and their comp software top notch.
In a declining market 23% yield without ROC would be EXTREMELY , EXTREMELY DIFFICULT to achieve.
I am thinking you have a good point.Maybe the .07 divi could be some ROC on any given month/quarter during a down period and then it is made up with the next month/quarters trades.
Supposedly they (Alpine) say there is no ROC in the divis and that makes it more difficult to figure out more precisely how they achieve what they achieve.
Nobody said it was easy to earn 20%+/annum. That is why I think Ms. Evans and her team are doing such a great job.
I have no idea exactly how Ms. Evans and her team manage to earb stellar returns every month. Suffice it to say that she/they do.
Ms. Evans and her team receive a management fee (and I presume a good salary) to do what they do. We hire them to do exactly what they are doing.
Thank you, Ms. Evans for doing such a great job making us money.
Appears to be substantially correct. ADVDX isn't 100% invested; it typically holds 3%-5% in cash (for redemptions, expenses, etc.), so the dividend payout total is a little less than your calculations. We just don't have any way to gain insight into their balance sheet to know for sure what's going on.