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High Yield CEF 4-Year Total Returns

Published Thu, 05 May 2016 13:10:27 -0400 on Seeking Alpha

Reaching for yield almost always ends in disaster.
This doesn't mean you have to be happy with 2% Treasuries or 1% CDs, but it does mean prudence, care, and diligence when it comes to finding higher yielding closed-end funds ((CEFs)), especially funds whose income source is junk bonds.
There are a number of reasons for this, ranging from managers' inability to earn payouts, depletion of NAV due to fees, bad bets, derivatives, systemic events, and other problems, and declining junk bond yields over time.
This doesn't stop many investors' hunt for yield, bringing them to have positions in long-term losers like the Cornerstone Strategic Value Fund (NYSEMKT:CLM), Prospect Capital (Nasdaq: PSEC), Chimera Investment Corporation (NYSE: CIM), and the Credit Suisse High Yield Bond Fund (NYSEMKT:DHY). These aren't all closed-end funds or even entirely comparable in any way but one: they promise a high dividend yield significantly higher than their peer group.
Why to Avoid High Yield CEFs
But the yield isn't enough to offer high returns, and the performance of high yield CEFs makes this clear. I've chosen to compare CLM and DHY with the Cornerstone Total Return Fund (NYSEMKT:CRF), Oxford Lane Capital Corporation (Nasdaq: OXLC), the Pimco High Income Fund (NYSE: PHK), and the Pimco Dynamic Income Fund (NYSE: PDI).
Except for PDI, I've chosen these funds because their yields are intoxicating; OXLC is offering over a 25% yield, while... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CS HIGH YIELD BOND FUND 2.77   4.2 0.66 0.26 9.46
CORNERSTONE STRATEGIC VALUE FUND 15.22   0.0 0.00 0.00 0.00
CORNERSTONE TOTAL RETURN FUND 15.03   0.0 0.00 0.00 0.00
OXFORD LANE CAPITAL 10.07   0.0 0.00 0.00 0.00
PIMCO HIGH INCOME FUND 7.46   0.0 0.00 0.00 0.00


Older articles featuring Cs High Yield Bond Fund (DHY):
US High-Yield Market Outlook: Week Ending December 8, 2017
Why Are People Buying Bonds With Negative Yields?
Is High Yield Signaling A Warning To The Stock Market?
A Most Unusual Cycle - The Shrinking Of The High Yield Market
High Yield's Diminishing Appeal
There's A New Yield Curve To Predict Recessions
Top 50 Monthly Paid Dividend Yields Range 6.7%-16.7% For U.S. & CDN Mid-September Equities
Why High Yield Bonds Could Surge Again
Is High Yield Today More Resilient To Oil Volatility? Not At Any Price
High-Yield Bonds Q2 Update: Still No Bubble Forming