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Follower ○○

Are these great mutual funds for income?

I'm trying to understand the ins and outs of income investing. It seems like a VERY high yielding mutual fund holding lots of stocks would be a good way to go. I stumbled across two such funds and plugging these (ETY and EOS) into Portfolio Visualizer reveals some very decent income results. 

There must be some catch. Please let me know your thoughts.

Thanks,

Jon

 

 

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Explorer ○○

Re: Are these great mutual funds for income?

 Sometimes a example of a higher paying dividend security is good for not only answering your question but will serve as a basis for many other comments [pro/ or con]. Some of us are income oriented dividend investors who use a 9% minimum when we are looking for a current MktBuy. Sometimes we see a good value and buy for less but that is rare....

 One of my best income performing securities [analysis shows this CEF had the best performance in my current portfolio this past week] was AVK. AVK, if bought currently, would have a dividend of 10.11% which is sort of low since many of us have been buying this security for a while now [dollar cost averaging up]. Below is my current analysis:

----------------

....Current "abbreviated" analysis data [COB Friday] for AVK [sole analysis opinion]:

1... Report Card Grade: 100 [0-100 rating system]

Power Rating: 100 [must be higher than the RptCard grade for any further buy consideration]

2... Star Rating: Positive: 10star [0-10star reference with 10 being the max]
-Past !3-wk Star Rating: Positive 10 stars

3.. MktPrc: 13.91 [COB Friday]
-Best current buying Price this coming week [estimated by analysis]: 13.74-13.79
-Analysis Score for MktPrc/NAV past week: 371 [>300 required for positive week]
-Last average weeks market activity on the MktPrc activity: +0.04 [investors have been Buying]
-Discount: -1.13 Very Positive for current investors & considered undervalued...
-Trend [going forward]: +8.17 [+4.24 minimum required]

4... Dividend: 10.11% for new buyers [$0.1172/Month ... $1.4064/Yr] ... x-div 7/14 ... Pay 7/31
...Continuing same distribution
...Dividend maintainability & growth calculation: +4450 [+3710 required]
...Next distribution announcement expected approx 8/4

5... Last Insider buying activity: 9/13/19 4,600sh @ 14.24

6... Rf [risk factor for holding in one's portfolio]: Positive +0.948 [+0 to + 0.990 range for analysis evaluation]

7.. NAV: 15.66 [COB Friday] ... Undervalued
-Change in NAV last week: +$0.14
-Change in Intrinsic Value [COB Friday]: +$0.13
-Change in NAV since 3/20: +$8.04

8... Total analysis numb3rs: 2050/3137 [requirement is 1000/1400 for normal trading range and >2000/2500 for current buying activity]

9... Disclosure: Some of us currently hold a Phase #3 position [6% - 8% of total portfolio] ....

One "single opinion" of the many I am sure....

-----------------------------

 We must remember though that through our own individual analysis we all have different parameters that we will either buy or sell with. Many of us will buy or sell with our individual analysis. Each of us have our own individual goals and objectives for the year we are in and have specified parameters in our analysis which may have more meaning than other investors....

 Hopefully, this post will give many other investors to comments [pro or con] and each post is important as we are "always" learning something new. Closed minds when encountered on our part [including me], with no offense intended to anyone, gives us market losses that we could have avoided. Add to this, that some comment only posters do not post any analysis data for our education or comment and this is a tragedy for many of us are always on the prowl to learn more than we currently know now....

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Frequent Contributor

Re: Are these great mutual funds for income?


@luckyinvestor 

 

      The catch they’re a subset of funds. Closed end funds with limited shares and borrowing to goose the payouts. Are you prepared for 20-30% drops in value when this current stuff occurs, no growth of principal in fact and constant downward pressure?

       We converted 40-50% of our retirement portfolio to CEF’s. We received all our investment back in about 10-12 years and are now receiving house money for the rest of our lives. Less market dependence, stress and decision making as we age. Income problems solved forever except unknowns. We put the original investment back into growth to cover all markets. Other then monitoring we’re finished. As long term investors there are few circumstances where changes are necessary.
       
        Obviously these are not for everyone. We made a decision that in an average 15-20 year retirement we wanted to distance ourselves from the market as much as possible but still have excess income to needs. These products fit that goal. In hindsight at times like these largely leveraged bond products and equities are the only choice you have, at higher risk, for sustained income. Also the 10-12 years of excess unspent income acts as an added cushion. Absolutely no regrets at all.

 

 


 

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Participant ○○

Re: Are these great mutual funds for income?

I don't use funds at all.  IMO, one ends up paying the fund company far too much of the yield the fund generates.  CEFs are a special case, but I find their use of leverage to feel risky to me.  I buy all individual stocks, I own about 30 different stocks..  Enough to have a good variety, not so many that I can't keep up with them.  My portfolio pays me close to 5%.  While there are occasional dividend cuts, they haven't been enough to worry me, especially since other of my stocks have increased their dividends.  

Also, my portfolio has produced some nice  cap gains.  I don't count on the cap gains, (as I don't ever want to have to sell stocks to have enough money to live on) but they have been useful.

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Participant ○

Re: Are these great mutual funds for income?

I've always held mutual funds, but in the dark days of late March I began to buy some positions in individual stocks. These went into my first taxable account.  So I have a beginner type question.  In this taxable account, are dividends from mutual funds or ETF's  taxed the same as dividends from individual stocks?  

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Participant ○○

Re: Are these great mutual funds for income?

Yes, same rules.

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Participant ○

Re: Are these great mutual funds for income?

Thank you. 

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Contributor ○○○

Re: Are these great mutual funds for income?

I have listened to you talking about your method for a while. As I recall you have a good chunk in PIMIX too. Do you own any equity funds? It seems that with so many CEFs and PIMIX you would have substantial losses still in your portfolio. Are you really "distanced" from the market. Curious about your thoughts. Thanks.


@steelpony10 wrote:

@luckyinvestor 

 

      The catch they’re a subset of funds. Closed end funds with limited shares and borrowing to goose the payouts. Are you prepared for 20-30% drops in value when this current stuff occurs, no growth of principal in fact and constant downward pressure?

       We converted 40-50% of our retirement portfolio to CEF’s. We received all our investment back in about 10-12 years and are now receiving house money for the rest of our lives. Less market dependence, stress and decision making as we age. Income problems solved forever except unknowns. We put the original investment back into growth to cover all markets. Other then monitoring we’re finished. As long term investors there are few circumstances where changes are necessary.
       
        Obviously these are not for everyone. We made a decision that in an average 15-20 year retirement we wanted to distance ourselves from the market as much as possible but still have excess income to needs. These products fit that goal. In hindsight at times like these largely leveraged bond products and equities are the only choice you have, at higher risk, for sustained income. Also the 10-12 years of excess unspent income acts as an added cushion. Absolutely no regrets at all.

 

 


 


 

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