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Equity CEFs: Don't Judge A CEF By Its Yield

Published Tue, 02 Sep 2014 13:48:19 -0400 on Seeking Alpha

It's a given in the Closed-End Fund (i.e. CEF) universe. The higher the yield offered to investors, the higher the fund's valuation typically. Equity CEFs that offer around 9% or more yields often trade at premium valuations while funds that offer 5% or less yields typically trade at wide discounts. The problem with this strategy is that investors often think that any fund that offers a uber high yield of 9% or more is somehow deserving or is doing something special to justify its high yield. This is hardly ever the case. In fact, the vast majority of funds that offer such a high yield are usually suffering Net Asset Value (i.e. NAV) stagnation at best and significant NAV deterioration at worst with the end result being poor total return performance (i.e. including those high distributions). The reason is simple. If a fund cannot cover its distribution (and all funds... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
H&Q HEALTHCARE INVESTORS 19.76   0.0 0.00 1.84 9.31
H&Q LIFE SCIENCES INVESTORS 16.51   0.0 0.00 0.00 9.00
PIMCO GLOBAL STOCKSPLUS 12.50   0.0 0.00 0.00 9.00
GABELLI GLOBAL HEALTHCARE & WELLNESSRX TRUST 10.72   0.0 0.00 0.00 5.25

H&Q HEALTHCARE INVESTORS - HQH
H&Q HEALTHCARE INVESTORS - HQH  


Older articles featuring H&q Healthcare Investors (HQH):
Pace Of Dividend Cuts Accelerates In February 2019
High Yield Strategy Fails Again
Dividends By The Numbers For May 2018
Share In Healthcare And Biotech Gains With A 9.5% Yield
High-Yield Investing: Strategy For 2017, Risks And Sectors Set To Outperform
Retirement Income: High-Yield, Sustainable Capital CEF Portfolio Continues To Shine At One Year
Are CEF Investors Getting Suckered Into High Yields?
Best 'High Yield Sectors' For Income And Growth - To Consider Today
An In-Depth Look At The Extended Valuation Of Defensive And Income-Yielding Equity Sectors
Retirement Security Amid Global Crises: The Problem Of Cutting Risk And Maintaining Yield

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