In the last financial year GGN issued $342 million in new common shares. If they had not issued new stock they would not have been able to pay their dividends.
Problem is that option income, investment income and capital gains cash flow have not covered the monthly payout for most of the quarters for the last five years. They get the cash to pay dividends by issuing new shares. That eventually catches up with the fund management and results in dividend reductions.
Dividend has been reduced to .09. That is .14 to .12 to .09. One can get more reliable monthly checks from several other closed end funds. I still don't like the way GGN sells new shares to raise cash.
NAV has not been rising. It has consistently fallen over the last year from the $13.50 area to its current level. You can only evaluate the health of GGN by seeing how much cash was generated by the sale of new shares. GGN frequently sells new shares in order to raise cash and be able to maintain the dividend. They did that a lot in the two years before they lowered the dividend from .14 to .12. There are much better buys to hedge future inflation and much better buys if one is looking for consistent reliable income.
PHT just released its annual report and the performance for the last six months of their financial year was outstanding. NII averaged .149 per month versus a dividend of .1375 per month. UNII increased from .50 to .55 per share. PHT continues to be one of the best high yield funds.
NAV is down since the dividend reduction was announced so the money being saved from the reduction is not helping maintain or increase NAV.
If financials do not change then reality will eventually catch up with a stock's dividend and its stock price. It has not happened to UTF because one quarter does not make a company. However this type of poor financial performance has taken place before which does not bode well for the future. Investors buy whatever they want. Being aware of the facts may help some invesors losses by investing in other funds that provide a better return with less risk.
MAV has been a good fund for me also but you need to take a closer look at the financials. For the last year MAV's NII has averaged .078 versus a dividend of .095. That has not been too much cause for concern since MAV had a large reserve of undistributed net investment income. However that reserve has gone from .68 to .389 to .279 as of their last financial report. You might want to lighten up on MAV and consider buying some MHI which is covering its dividend. As good as MAV has been, things change and the financials don't lie. If the current trend continues look for MAV to reduce its dividend to .08 or .078 just after its next financial report.
It all depends on your objective. .065 x 12 plus .10 =.90 .90/10.00 = 9%. If you are satisfied with that return then $10 is a good buy price. If HYB reaches $9.50 I will buy some shares.
The annual report released a few days ago shows a continuing decline in NII to .075398. The Undistributed net investment income is down from .19 to .01 due to the special year end dividend of .185 which was paid in January 2013. Despite the NII downward trend, HYB is continuing to cover their monthly dividend of .065. However it is unlikely that any special year end dividend paid in January 2014 will be more than .12. That means next January's dividend will probably be .185 and not the .25 paid in January of 2013. The special dividend couuld be even lower if NII continues its downward trend. When shareholders realize what has happened look for the share price to fall below $10.
I don't own this fund but I do track its financial performance along with other Cohen and Steers funds. The news from the current annual report is not good. The net investment income for the last six months of the financial year .055564 per month. That is contrasted with a dividend of .36 per quarter or .12 per month. The Undistributed Net Investment income declined from $8.7 million at the beginning of the year to $1.49 million at the end of the year. The realized loss for the year was ($5.5 Million). The only bright picture was the change in unrealized appreciation of $291,624,547. That is a big number and a big increase but it can also go down depending on share price of assets. The increase helps the NAV but the actual cash flow of the fund can not support the current dividend. While they can sell assets to raise cash to maintain the dividend, the fund already sells at a sizable discount to net asset value. What needs to happen is for fund management to substantially increase the cash flow to the dividend can be sustained.
Because nothing significant has happend to change the basic operations fo the fund. The new team are existing personnel from Alpine Woods. The dividend cut simply results in a level NAV unless they eliminate dividend capture as a method of generating income. The fund is a disaster. While they may not fold or consolidate the fund into another existing fund, the investment methodology will not permit them to achieve enough capital gains to substantially increase the NAV. If you have owned the fund since inception and are planning to buy more you need to have someone else manage you investments and help preserve your capital.
Don't look for the buyback to benefit shareholders. The first problem is that no dollar amount was announced. You can bet it will not be big. Second AOD was originally established as an above average income fund. That is no longer the case. It is a below average income fund with a poor NAV track record. It makes no sense to invest money in AOD where there other good income opportunities.
The forecast of a decline in dividend from .105 to .10 was fulfilled today when WEA announced their new dividend of .10. If things do not improve look for the dividend to drop again to .095 and eventually to .09. If you want to buy look for WEA to drop below $14.50 before making a purchase.
Closed end share prices have an established trend. Share prices trend down in the October to the first part of December time period or until the special year end dividends are announced. They trend upward for the first four or five months of the year. If you get lucky you may see some softness in PTY share prices before June or July. For the last two quarters PTY NII has not been as high as the prior three years. High level of NII is what allows PTY pay the sizable year end special dividend. If it looks as if that dividend will be lower at the end of this year the share price my decline to under $20. That is the time to buy.
FFC just released its annual report and the results are strong. For the last three months of the year NII was .145931 which is 107% of the .136 monthly dividend. UNII rose to .100765. In the last dividend announcement FFC is keeping the dividend at .136. Based on these results FFC's dividend should remain at the current level and depending on the NII results for the next two quarters it might be possible that they would raise their dividend to .14. This is an outstanding closed end fund. For those concerned about the interest rates of new preferred issues, they are high enough that when FFC turns over a portion of their portfolio the NII should not be negatively impacted.
That is what makes a horse race. For your sake I hope they do a great job. I just don't see any significant change that demonstrates they will do anything different. As you said we will see what happens.
The managers are not new to Alpine Woods and the senior managers to whom they report remain the same. The investment objective as restated in their dividend announcement stayed the same. So they have changed people but have not changed objective, investment philosophy or the top management to whom the fund managers report. How are they going to turn AOD around?
Unfortunately my forecast for a dividend reduction came true. The reality was however must worse than the forecast. Reality is a cut to .027 from .055. The problem with a cut like that is now AOD is not an income fund. The payout ratio does not begin to be competitive with other fixed income funds. AOD is not an income fund and it is not a growth fund. The way in which it is being manages provides no benefit or investment objective to its shareholders. The reduction was an attempt to stop the NAV decline and does not fix the basic problem that Alpine does not know what they are doing. Look for Alpine to consolidate AOD and one of the other closed end funds.