Again, it's common knowledge that IRA accounts are tax deferred. Tax advantaged funds such as GABUX are designed for taxable accounts. Hint: You keep vehicles that produce capital gains in your taxable account because those in the 10 or 15 percent bracket pay zero cap gains tax. You keep income producing investments (dividends) in your traditional or ROTH IRA for dividend tax avoidance.
They have no clue and it's just sheer conjecture. If they did know, it would be insider information. Stripes, ball, and chain anyone?
Often, the truth hurts and is unpopular but please, don't shoot the messenger.
Of all the web sites providing quotes, yahoo is the only one I've seen that reports the yield correctly at 2.31 percent. This is because most sites are not taking capital gain and ROC distributions into consideration along with the required cost basis adjustments. Since quotes & stats are computer driven and often from unspecified sources, for simplicity they are counting the entire .07 cent distribution as income and incorrectly basing the yield on that figure.
A return of capital is a distribution that typically is not out of earnings and profits. In the case of Gabelli, ROC is used to maintain the "managed distribution" of seven cents monthly --primarily to discourage liquidations and to help prevent investors jumping ship as the price falls over time. When you receive a return of capital, it will be reported on Form 1099-DIV. A return of capital is not taxed as ordinary dividends, but (in the eyes of the IRS) is treated as a return of your original investment. As such, it will reduce the cost basis of your shares in the fund by the amount you receive. Since your basis cannot be reduced below zero, when a return of capital exceeds the adjusted tax basis of your shares, the excess amount must be reported as a capital gain.
Per IRS rules, distributions received when you have reached Zero cost basis are taxable in the year received. This means they will always be treated as short-term capital gain and the entire .07 cent distribution taxable regardless of your tax bracket. Gains must be long-term to avoid being taxed if you are in the 10 or 15% bracket. So again, no free lunch. This is why the IRS requires distributions in excess of adjusted tax basis (when you attain zero cost basis) be paid in the year they are received. This insures they will always be counted as short-term and the government getting their piece of the pie.
To find the yield, you divide the annual dividend by the current price. One cent monthly x 12 = 12 cents annually. .12 / 5.46 = 2.2%. You should not count the return of capital (ROC) portion in this calculation because that portion is not taxable and is subtracted from your cost basis. When your cost basis reaches Zero, then you can count the entire distribution since you'll be taxed at the capital gains rate if you're in the 25% bracket or higher.
The yield is way too high and investors are wary. The old "is this too good to be true" syndrome is now in the driver's seat and is preventing price appreciation. Added to the mix is uncertainty over the looming fear of Fed tapering.