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Tekla World Healthcare Fund: High Yield, Monster Expense

Published Fri, 07 Aug 2020 14:12:13 -0400 on Seeking Alpha

Seeking AlphaETF Analysis | Healthcare Tekla World Healthcare Fund: High Yield, Monster ExpenseAug. 7, 2020 2:12 PM ET|| About: Tekla World Healthcare Fund (THW), Includes: AZN, AZNCF, JNJ, MRK, NVS, NVSEF, RHHBF, RHHBYby: Michael A. Gayed, CFAMichael A. Gayed, CFA The Lead-Lag ReportAnticipate Corrections and Volatility with Award Winning ResearchSummaryDividend investors may fall in love with Tekla World Healthcare Fund at first sight because of its 9.57% dividend yield and payout consistency.
However, the fund's cash flows are facing rough weather because of its high expense ratio.
An ETF that tracks an Index and has a low expense ratio may be a better choice.
The art of medicine consists of amusing the patient while nature cures the disease. ― Voltaire
At first glance, Tekla World Healthcare Fund (THW) looks like a solid dividend bet because it has been paying dividends consistently since inception and it sports an attractive dividend yield of 9.57% (as of August 5, 2020). The second big plus is that the fund's advisors are experts from the medical profession. The third huge advantage is that the healthcare sector stocks are on a roll post-COVID-19, and that kind of rounds up the "love-at-first-sight" feel an investor gets when he first skims through the fund's basics.
However, there is other stuff lurking beneath the surface that every investor should be aware of.
Before I get to that, here are the fund's internals:
THW's Portfolio & Allocation
THW invests in all healthcare subsectors for long-term capital appreciation and income. It is committed to investing at least 40% of its funds in companies outside the U.S. or in companies that earn substantial revenues from markets outside of the U.S. because the fund's advisors believe that quality global stocks can be available at very attractive prices.

Image Source: THW Website
About 36% of THW's funds are invested in 10 holdings, comprising of high-quality stocks like... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
JOHNSON & JOHNSON 130.43   21.6 6.03 3.80 2.93
MERCK & CO 83.31   23.3 3.57 2.20 2.69
NOVARTIS 89.49   18.4 4.87 1.84 2.08
ASTRAZENECA 42.90   49.3 0.87 0.88 2.03

JOHNSON & JOHNSON - JNJ
JOHNSON & JOHNSON - JNJ  


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