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PIMCO High Income Fund (PHK)
NYSE - NYSE Delayed Price. Currency in USD
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347 reactions on $PHK conversation
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all Pimco cefs are being punished today, especially PFN, PFL, and PTY.
I took a position in this income fund for the first time today at $7.08. First time in PIMCO, period.
Why is it down so much?
due for another dividend cut?
check out the UNII report
Stll no dividend from td Ameritrad account They are slow
I know that most people don't do research when they buy funds, or for that matter, when don't research anything they buy.
I always do a lot of research. So here is something that should help people (those who are interested) understand PHK a little bit better.
Every fund has its pros and cons. I will start with cons, but I should state right away that I think there are more pros here than cons.
For PHK, the biggest con is its high premium. The fund is very popular fund and that's why it's trading at almost 30% premium. That's huge. It means they have $100 in assets but people are willing to pay $130 for the stock. Implication? If tomorrow Pimco decides to close the fund they will only return to investors $100 (price of NAV). People will lose the remaining $30. Although this unwinding is possible it is not very unlikely.
Another con is management. Alfred Murata and Mohit Mittal have been running this fund only 5 years. Take a look at the chart and you will see that PHK was in steady decline since they took over. They also kept cutting dividend. I looked up both managers. They don't seem to be heavy hitters like Mario Gabelli or Jeffrey Gundlach. But they also run PTY and this fund did better than PHK.
Return of capital is another con. PHK consistently returns between 10-15% of their distribution as ROC. I hate ROC because it is basically a payment made from your own principal. However, in this case it's not 100% con. About 15% of PHK's portfolio is MBS and ALL real estate investments have depreciation. That's where this ROC is coming from. Not so bad.
That's it about cons. Now, pros.
The fund is pretty large. 1 billion.
Management fee is low. About 1.5%. Check out other funds and you will see 2.5-3.5%.
Dividend is paid monthly and even at 6 cents its over 10% a year. That's a very good dividend.
Leverage is relatively low. 23%, Most funds have 35%. Most muni funds have between 45 and 50%.
The fund was initiated in 2003. That means it survived market crash in 2008. Granted, the price dropped to $4, but it recovered in 3 years.
Half of their bonds are investment grade. This is a really good thing. You won't find too many funds that pay such a big dividend and have portfolio of such a good quality (relatively speaking, of course). Most pay between 5 and 6%.
Interesting thing. Their portfolio has a lot of both long and short "other" investments. This indicates a good distribution of hedges (insurance against big market swings).
Although Morningstar classifies PHK as high risk it also has gives it five stars and puts it in high return category.
Summary. I did a study on a stocks that over the long period of time (20 years) lose 50% of their price and get dividend cut to maintain 10% of lower share price. This will still generate 15% a year return on original investment. To put it simply, if you invest 10K in the stock that pays 10% dividend, reinvesting this dividend, you will end up with 31K after 20 years. That's 15% a year total return.
I hope this helps a little. There is more to PHK, but this post is already a mile long. :)
Board of Trustees of each Fund (including PHK) has authorized to conduct a voluntary tender offer for up to 100% of its outstanding auction rate preferred shares. . . I believe this is good in the long run. Your feedback is welcome!
Anyone else have dividends reinvested back into the stock through their brokerage? I've noticed that my broker seems to show that the reinvestment is pending.. and it just finally went through today. Now - on top of that, the number of shares purchased and the cost per share does not add up to the total dividend amount. Almost like there is some kind of fee for having dividends reinvested. I've noticed this on Pimco and Allianz funds I have but other REITs like NLY and AGNC the numbers match perfectly.
Is this a good fund to jump in now at $5.30 per share? Seems like nav should only go up from here plus the 10% dividend? Thoughts? Or is this a sinking ship? thanks!
I bought some below $4.70, maybe I get lucky this time around. Why not.
The interest paid on the national debt can be thought of one slice in the pie chart of government expenditures. If interest rates go up, that slice gets larger. Government will resist rising interest rates for that reason. PHK will find it easier to make profits with higher interest rates. My guess that PHK will survive but not thrive. I've been long PHK for many years and fully intend to stay long. I've received so much in dividends that it is now free stock.
Here is my take on PHK.
I AM NOT HAPPY!!!!!
Ok, now that it's out of the way, let's think. All the trigger happy people who are ready to flood me with thumbs down, hold your horses. I am just being logical.
The damage is done. They cut the dividend by 25% which at current $9 price would bring it down to 7.5%. So, the huge price move is understandable. At $8, the new dividend would 9%.
That's still low, so I suspect (certainly hope to be wrong about it) PHK will go down further. The premium on this fund is massive, around 40%. People can buy PTY and get the same 9% dividend. PTY has more investment grade bonds. It also trades at half PHK's premium.
I have both. Averaged with PHK at $7.5 and in the past 3 years I am only showing 3% gain annually. I AM NOT HAPPY!!!!! Well, I said that already.
I am going to hold on to PHK for a little while. Will see where it goes in the next few days. Don't like to sell when everyone is panicking.
8.50 next stop
Gift. PHK, never missed a payment through the whole Financial collapse.
will there be a year end bonus ?
will this fund cut it dividend?
Slowly but surely we are recovering.
Finally sixth up day in a row, Will take it.
all you people look at phk in 10 years you'll be a very satisfied it's not a stock that you trade daily
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