The only benefit in a traditional IRA is the managed payout. It is not "yield" . GABUX allows one to spend down an IRA in an easy set it and forget it mode. If you do not need to spend down an IRA over a period of 10 yrs or more than GABUX really is not appropriate in a traditional IRA. GABUX is not appropriate for the vast majority of people who seem to think it provides a high yield. But, people who are trying to manage "taxable income" to game ACA subsidies or to game medicare rates benefit a great deal from ROC vs taxable dividends and may find GABUx ROC distributions to be exactly what they need.
Depends. I believe it could go higher not so much for what it is worth today, but for potential growth over next several years. Not really paying much of a premium right now. So, if Walgreens or some other suitor values the potential for growth a slightly higher premium then 70 or 75 is not out of the question. Other PBMs continue to have big targets on their backs so perhaps that alone is enough to keep premum down.
The point of my post was that others on the message board were whining about the recent performance of GABUX. Pretty much blaming RS and investors selling as the issue with recent weakness. The fact that GABUX is holding up better as of late was lost on them.
upsidedown, before i put you and chevyboy on ignore I just wanted to let you know how much I've appreciated your idiotic posts. Your posts have been about as fun to read as DILBERT. I liken you to the pointy hair boss. Fully of it, yet so unaware. Good luck to you in your investing, you are gonna need it. Hopefully you have just been putting us on all. Right? You weren't really serious about PSEC being a good investment were you? Anyway... don't worry I won't reply to any of the BS you might post on this board again.
I really try to give most message board posters the benefit of the doubt. But This will be my last post in reply to you ever. You can take it to the bank. Go home to mama and cry your heart out. You obviously have no clue to investing. None. Nada. You and upsidedown are pathetic in you bashing of this fund. You have no clue. You should just prepay your expenses because investing is beyond your comprehension. Your gibberish is such that wild monkeys understand you. Go figure.
Depends on what you consider a decent Yield. For High Yield I own RSO. RSO will likely cut its dividend so I'm waiting to add until the new divy is announced. I also own LNCO and will fill my position when I believe oil has bottomed. I lean towards dividend growth stocks so most of my portfolio is in DGI stocks. I have less than 10% of portfolio in high yield. Dividend growth stocks are KMI, MO,PM,PG, KO, and WBA to name a few. Growth stocks are CTRX,LKQ,CELG, and GILD to name a few. I also own PDT a CEF that is leveraged but has a pretty decent long term track record of total return with about an 8% yield. The best way to get a decent yield is to buy a good company that is growing its dividend at a fair price and not selling it. Keep in mind GABUX was never a Yield play, that is why there is so much angst on the message board. The only mutual funds I currently own are Vanguard Wellesley and Wellington Income funds and prime money market. They are the only investments I'm currently adding new money to, all other purchases come from existing invested capital. About 10% is in growth stocks 75% in DGI and remainder in Vanguard fund.
the utilities sector recently with all this talk the message board resident expert on NAV declining. Could it be that GABUX is down simply because the utilities sector is down nearly 10% in the last month or so? Ya think...
you need to check the dates in your example. Seems this example is over 15 years not 10. So I think you just pretty much proved the point about having a bit of trouble with math. You might want to stick with index funds.
The numbers and ratios were not the same when I bought it? Duh...The amount or ROC has been pretty consistent for at least the last 10 years if not since the IPO. The Once again you are confusing the distribution payout rate with Yield with Total Return. The only problem with your viewpoint is that it is not supported by data nor math.
I'm not the one who bought this fund I never drank the kool aid. 3 or 4 years ago I warned investors in this fund of the unsustainable distribution. I was laughed at and ridiculed for my misgivings about the rate of NAV decline and the impact it would have on the ability to manage the fund. Back then GABUX had about 20% of its assets in cash. So now, I realize that after the RS, the issues I had with the fund regarding the sustainability of the distribution are resolved.
One flaw in your post is that with GABUX you get a total return of about 8% a year. GABUX has almost a billion dollars in unrealized GAINS on the books. Your example is flawed because GABUX is earning the 8% on average each year, they are not "saying" they earned it. Rather than making the distribution a fully taxable event to the shareholders, they are deferring your tax bill until you SELL or have a zero basis in your shares. In essence the Class B and C shares are not marketed to minimum wage earners, but to people who benefit from the tax treatment of the distribution. Again, GABUX does not pay a dividend, they have a distribution big difference.
Maybe in a convoluted way. Each year the "yield" has been around 2%. You've already paid taxes on the portion of the distributions that were dividend and capital gains. The ROC you received each year has decreased your basis. You will pay capital gains on the difference between your adjusted cost basis and the price sold. For example,assume you bought five yrs ago and have received 60 monthly distributions. for simplicity am assuming 6 cents a month ROC. or 72 cents a year or 3.60 over 5 yrs. If you paid 6.30 per share and sold for 5.02 you would have a gain taxable gain of 2.32 per share. Gain is sales price - (original price - ROC). If you reinvested then you'll have more adjustments.
8.4 is not the dividend rate, it is the payout rate. You are receiving a return of capital, for a portion of your distribution. I've already posted why I think GABUX fills a void for some retirees. Other funds are the Vanguard Wellsley, wellington or Managed Distribution funds. If you need a higher rate of distributions/current income then a few CEFs like PDT or DNP are okay. I'm weary of putting funds into equity when the market is near highs so personally I average into a position.
Okay...here is my unsolicited opinion. You have to define lucrative. If you mean will GABUX double my money in 5 years. No, it won't. If you mean in 5 years will GABUX still be chugging along at about an 8% annual total return. Then yes, it will be. The RS and distribution cut will allow the new distribution to be sustainable, for a least as long as the previous distribution was. This fund is not and never was ideal for young investors. It is however, possibly a good addition to a retirees portfolio. Especially if one wants to put a portion of their portfolio withdrawals on autopilot. A low Beta, low standard deviation, low turnover and above average long term total return make this attractive. The expense ratio has always been a negative.
No longer Lucrative? Hmmm.... much of the anger on the message board is by people who didn't know what they bought.
I don't know why the RS would be a surprise at this NAV. 5 bucks was the key level for marketing shares... I'm not invested here yet. The reason why I closed out my small position several years ago was concern with NAV erosion and sustainability of distribution. I never thought it was a good idea and posted as much to reinvest distributions into additional shares of GABUX, Never made sense to me because I don't like to reinvest in a declining NAV. This is not a risky investment in terms of Beta and investment approach.