The performance for ADVDX for the first 4 month of the year has been published by Alpine as a 1.48 total return with dividends reinvested. The NAV is actually down by 5.13%. Making matters worse is the fact that the dow is up 5.56% plus dividends. That means going forward ADVDX has only .9487 cents to purchase dividend capture assets that now cost 5.56% more or $1.056(using the DOW as the measurement). They have less and what they buy costs more. The over all gap is over 10%. That's like trying to drive farther with less gas up a steeper hill on this trip than the last one.
How to salvage the 1st 4 months? I plan to invest 60% of the sale proceeds of 5000 shares of ADVDX in a closed end Nuveen fund selling at a 7.71% discount. This will net me $1,173.00 of additional dividend earning NAV. The dividend yield on the fund is currently 8.83%. The other 40% of the proceeds will be invested in IDE, which is an ING global infrastructure fund selling at a 3.44% discount and yielding 9.29%. IDE is selling at a discount of 3.44%. This will net me an additional $349.00 of dividend earning NAV. This $1,552.00 increase in NAV causes my NAV and as such total NAV return on these assets to increase by 6.12%. Adding that to the 1.48% ADVDX returned YTD gives me a total return as measured by NAV of 7.58%.
The YTD performance for JCE NAV has been 6.44%. The YTD performance of IDE NAV has been 8.66%. This is a blended 7.33% YTD total return. While the distributions paid will be less than ADVDX I believe the overall performance will be significantly greater than ADVDX. For example ADVDX paid distributions of $1,650.00 on 5000 shares for the 1st 4 months of 2010 but only actually returned $375.00. The combination of JCE and IDE have a current blended yield of 9.015% so 4 months of distributions would have been $761.00 using todays lower yield on the origanal ADVDX value of 5.07 per share. However these 2 funds would have actually returned $1,858.00. This exceeds ADVDX distributions by $208.00 and exceeds actual return of ADVDX by $1,483.00.
The distributions of ADVDX are called dividends and are technically "earned". However, in prctical application they are really primarily a return of your own money. Well, they did provide me $375.00 on a 5,000 share investment over the last 4 months. The $375 is real. The rest is something else.
I will still 10,000 shares of ADVDX. I plan to sell half of that at some point as opportunities arise.
Good luck to all.
Like a helpless and whining animal trapped by my snare, your weak and pathetic insults bounce off my breastplate. I remain strong and undaunted. Your long-winded breath and that of your henchmen smell of prairie dog yet you are no match against my strength. I have prepared a special place of torment for you and your foolish followers along the Appian Way. The next time my chariot rumbles through, you will choke on its dust. And, I will take great pleasure in watching the lot of you squirm in agony. But I will not linger, as there are many lands to conquer, women to tame, and goods to plunder.
Check out shares of ETY - a covered write only fund ...holds mostly big cap / blue chip stocks and sells CALL options at the next higher strike price of the underlying stocks at the closest expiration ..typically 30 days duration.
The fund takes full advantage of the extrodinary tax treatment of exercised call options and provides a approximate 11.8% yield / quarterly payment ...next dividend due in a few weeks ...$0.40 per share ...so in 13 months ...you could expect to collect FIVE $0.40 per share dividends ...almost 15% return ...and 90% should be tax-invisible ...Since the fund has large embedded losses from 2008 ...there wont be any capital gains taxes for 2010 and 2011 ... so you get a 15% tax advantaged yield over 13 months of investment duration ...and hold the major blue chip stocks ...IBM, MSFT, HP for example ...if the economy continues to recover ...the fund NAV will continue to appreciate ...think the fund is trading at a $0.07 per share DISCOUNT to NAV right now ...The fund's latest quarterly report shows that they are making the quarterly dividend without a problem ...and the tax advantaged aspect of the distributions should make up for the loss of income from ADVDX ...which will be taxed in 2011 at a new and outrageous rate ...some say up to 39% depending on your tax bracket ...
I dont follow JCE but the emerging markets seem risky ....and the ETY already gives you equity market exposure ...look at FTT ...a recent fund that came out at $20 per share and true to form has dropped to the $18.50 area ... the fund is composed od 100% US Treasury bonds ...but also sells CALL options ...and interestingly has a FUTURES component where the manager can BUY / SELL futures contracts each month ...this gives the fund a chance to counter the impact of rising interest rates ...which demolish most fixed income investments ... with Greece / Portugal / California / New Jersey decending into a third world like bond crisis ..why own anything that is not a direct obligation of the US government ? still AAA ...at least for now ...FTT pays monthly and the annualized yield works out to about 7.8% ...for the SAFE portion of your portfolio ....
Summary - 30% to fixed income / US T-bonds to diversify and reduce risk in the portfolio ...30% to ETY to create a strong quarterly income stream ...with a good upside potential ...you could continue to hold on to ADVDX ...but the high taxes coming very soon and the weak performance over the past few months, as you have pointed out, indicate that Alpine may be "straining" to produce the monthly dividend ...a cut would be devastating ...both FTT and ETY are earning the dividends amd seem to be in good health ...
hope this helps -
Mike, thanks for the info. I already own ETY and it has been a good investment that I believe will continue to provide nice returns.
I have been following FTT but am a little skiddish as to what will happen if or when rates rise. I like GABUX too but am holding off for the same reasons.
Take another look at JCE. They hold core equity. All positions are from S&P 500. Sells at a nice discount and only options 50% of the portfolio.
You are correct Pork Chop. Only yor opinion. Won't lose any sleep. And talk about long winded, if I never hear your infantile Roman warrior dribble again it will be too soon. Difficult to grasp, 65 years old and still trying to be cute. Well at least you have a groupie in AWL59SAW. Be careful though, sometimes we become known by the company we keep. Good luck!
You don't salvage anything. You shut your long winded trap and hold for the long term. That's what dividend capture is all about --collecting the dividend stream. If that is not good enough, sell and find something else to whine about.
Pork chop, you can collect these dividends and reinvest and make 1.48% total or maybe make the since inception total retun of 4.64% if that floats your boat. I hope this is enough to fill your trap with nourishment. Tough to survive at this funds rate of return. There are better opportunities. I am out of this as opportunities arise. Good luck.