Volatility in the market can be unsettling, especially amidst the current political climate and uncertainty surrounding interest rates. It’s a time when many investors might consider retreating to the safety of cash. However, for dividend investors, such a move could come at a steep price – the loss of a crucial income stream.
One sector that shines during uncertain times is Closed-End Funds (CEFs), which are currently yielding around 8%. In fact, some CEF portfolios, like that of the “CEF Insider” service, are even yielding as high as 9.4%.
Discovering the Stability in 8%+ Dividends and Growth Potential
Despite misconceptions labeling CEFs as speculative investments, in reality, these funds are subject to stringent regulations, akin to major corporations like Microsoft, Home Depot, and Walmart. Managed by established financial institutions with abundant resources and market expertise, CEFs can offer stability amidst market turmoil.
Instead of succumbing to market fears and moving to cash, a dividend-oriented and CEF-focused strategy can help investors navigate potential volatility effectively. Key approaches include:
- Focusing on undervalued CEFs beyond traditional sectors like stocks and bonds, such as Real Estate Investment Trusts (REITs). For instance, the Cohen & Steers Quality Income Realty Fund presents an opportunity to invest in oversold REITs at a discounted price, offering a double benefit.
- Embracing CEFs that invest in stocks at significant markdowns, providing yields that outperform the S&P 500. One such fund, the Adams Diversified Equity Fund, boasts an approximately 8% yield and a history dating back to 1929, showcasing resilience through various market conditions.
ADX’s ability to weather multiple economic cycles while delivering impressive total returns demonstrates the value of long-standing CEFs like this.
ADX: Delivering Strong Dividends and Long-Term Growth
Trading at an appealing 11.5% discount to its Net Asset Value (NAV), ADX offers investors an opportunity to purchase assets below their intrinsic value. With a revised dividend policy ensuring sustainable quarterly payouts tied to the NAV, the fund aims to enhance shareholder value and reduce the discount factor.
ADX’s diversified portfolio, enriched by tech giants like Microsoft, Apple, Alphabet, and NVIDIA, presents an attractive balance of growth potential and stability. Non-tech holdings like Visa, JPMorgan Chase, and UnitedHealth Group further contribute to the fund’s robust income generation.
The significant 8% yield from ADX translates into substantial annual income for investors, enabling them to rely on dividends without depleting their principal investments. Moreover, the fund’s capital appreciation, alongside consistent dividend payouts, underscores its long-term value proposition.
Enhancing Your Dividend Income to 10.5% with Monthly Payouts
CEF investments like ADX offer the unique advantage of acquiring premium stocks at discounted prices, coupled with generous average yields of 8%. Some CEFs even exceed this average, providing investors with substantial income streams, often distributed on a monthly basis.
Now is an opportune moment to capitalize on these high-yield CEFs, potentially elevating your income to 10.5% with regular monthly dividends. Don’t overlook the chance to augment your income portfolio with these lucrative options.
Disclosure: The authors are contrarian income investors providing insights on undervalued stocks and funds. For further details on their strategies, refer to the latest report on dividend growth stocks.