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BDJ: Covered Call Fund Yielding 7.75%

Published Mon, 16 Nov 2020 12:24:57 -0500 on Seeking Alpha

Seeking AlphaClosed End FundsBDJ: Covered Call Fund Yielding 7.75%Nov. 16, 2020 12:24 PM ET|| About: BlackRock Enhanced Equity Dividend Trust (BDJ), Includes: BAC, BAC.PA, BAC.PB, BAC.PC, BAC.PE, BAC.PK, BAC.PL, BAC.PM, BAC.PN, BACRP, BML.PG, BML.PH, BML.PJ, BML.PL, C, C.PK, C.PS, CMCSA, CPRJ, CTSH, FE, JPM, JPM.PC, JPM.PD, JPM.PG, JPM.PH, MO, MSFT, PHG, RYLPF, UL, UN, UNLVF, UNLYF, VZby: Nick AckermanNick Ackerman CEF/ETF Income LaboratoryCEF/ETF income and arbitrage strategies, 8%+ portfolio yieldsSummaryBDJ remains attractively valued with a deep double-digit discount.
The poor performance of this fund can be attributed to the overweight financial exposoure.
This overweight in financials makes this fund all the more appealing for longer-term investors.
Written by Nick Ackerman, co-produced by Stanford Chemist
BlackRock Enhanced Equity Dividend Trust (BDJ) has been able to hold its distribution steady throughout a tumultuous 2020. This is even considering the fact that the fund is overweight in the financial sector. Despite this, they have been able to maintain the same distribution that they boosted last year. Even more attractive is the fund's double-digit discount. This means that investors get to receive an 8%+ yield, while the fund's underlying assets only have to earn 7.17%. In their last report, they have even increased their net investment income.
BDJ has a primary objective to "provide current income and current gains." The fund intends to do this by "investing in common stocks that pay dividends and have the potential for capital appreciation." They will also utilize an option strategy on single stocks within the portfolio to "enhance distributions paid to the Trust's shareholders."
Overall, they concentrate a large "80% of its total assets in dividend-paying equities." The fund is overweight in the financial sector, so that has certainly put a drag on the fund's performance for the year. However, companies that typically pay dividends are... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ALTRIA GROUP 44.46   13.2 3.36 3.36 7.23
VERIZON COMM 60.43   15.8 3.83 2.46 4.04
FIRSTENERGY 47.63   119.1 0.40 1.52 3.25
CITIGROUP 69.30   9.6 7.19 2.04 2.96
UNILEVER 61.67   0.0 0.00 1.77 2.95
JPMORGAN CHASE 117.91   12.0 9.79 3.60 2.74
UNILEVER 60.75   0.0 0.00 1.86 2.58
BANK OF AMERICA 29.67   10.6 2.80 0.72 2.45
COMCAST 46.97   17.9 2.62 0.84 1.81
KONINKLIJKE PHILIPS ELECTRONICS 47.57   28.3 1.68 0.82 1.76
MICROSOFT 137.52   27.1 5.07 1.84 1.35
COGNIZANT TECH 64.84   18.0 3.61 0.80 1.24


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