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Cornerstone Strategic Value Fund: A Consistent Dividend Payer, But...

Published Thu, 30 Jul 2020 19:53:48 -0400 on Seeking Alpha

Seeking AlphaETF Analysis | Financials Cornerstone Strategic Value Fund: A Consistent Dividend Payer, But...Jul. 30, 2020 7:53 PM ET|| About: Cornerstone Strategic Value Fund (CLM)by: Michael A. Gayed, CFAMichael A. Gayed, CFA The Lead-Lag ReportAnticipate Corrections and Volatility with Award Winning ResearchSummaryCornerstone Strategic Value Fund’s portfolio is made up of giant caps and large caps, which are doing great these days.
Its dividend yield is a phenomenal 20.81% as of July 28, 2020, and it has a consistent dividend distribution record.
Investment in CLM makes sense for people who want to invest for more than 3-5 years.
Wide diversification is only required when investors do not understand what they are doing. − Warren Buffett
Cornerstone Strategic Value Fund (NYSEMKT:CLM) looks terrific on paper - a portfolio that's made up of giant caps and large caps, many of which are driving the indices these days, a phenomenal 20.81% dividend yield as on July 28, 2020, and a consistent dividend distribution record. Such ingredients can compel any dividend investor to buy CLM without thinking twice.
But wait!
There are a couple of factors that could make you think again, and I'll get to those later. First, let's start with the fund's internals.
Portfolio

Image Source: Schwab Website
Firstly, 27.26% of CLM's funds are invested in 10 stocks. Significant allocation amounting to 12.2% of total funds has been made to tech giants such as Microsoft (Nasdaq: MSFT), Alphabet (Nasdaq: GOOG), and Amazon (Nasdaq: AMZN).
Further, 91.54% of CLM's funds are invested in domestic stocks in diversified sectors. Of its total portfolio, 68.04% is invested in global giant caps and 25.58% is invested in global large caps. Many such stocks make up global indices, and as both domestic and global indices are doing well these days, the fund looks like it is in a sweet spot. Also, CLM's portfolio turnover is 45%, and this churn helps it manage risks... Read more