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HTD: Utility/Preferred Fund With An Attractive 7.8% Yield

Published Mon, 14 Dec 2020 14:27:42 -0500 on Seeking Alpha

Seeking AlphaClosed End FundsHTD: Utility/Preferred Fund With An Attractive 7.8% YieldDec. 14, 2020 2:27 PM ET|| About: John Hancock Tax-Advantaged Dividend Income Fund (HTD), Includes: EIX, PFF, SCE.PG, SO, SOJB, SOJC, SOJD, SOLN, XLE, XLUby: Nick AckermanNick Ackerman CEF/ETF Income LaboratoryCEF/ETF income and arbitrage strategies, 8%+ portfolio yieldsSummaryHTD remains at an attractive level to potentially add to one's portfolio.
Their emphases on being 'tax-advantaged' can be beneficial for those holding in a taxable account.
On a YTD basis, the fund hasn't been the most appealing - but longer-term the fund is solid.
Written by Nick Ackerman, co-produced by Stanford Chemist
John Hancock Tax-Advantaged Dividend Income Fund (HTD) certainly isn't having its best year in terms of performance. Yet, the monthly income remains stable and the fund's valuation remains attractive. Definitely more attractive than all of last year when the fund was flirting with premium levels. The portfolio is made up of generally stable investments; utility equities and preferred stocks. However, this stability didn't show itself in the face of March's selloff. Quite frankly, nothing was safe during that plunge.
That being said, the fund also didn't rebound quite the same as the rest of the market. The preferred sleeve did rebound quite rapidly - though utilities are still down for the year as measured by Utilities Select Sector (XLU). Still, HTD remains down further than that passive sector ETF. Exposure to the energy sector also contributed to its lagging performance relative to a preferred/utility composition.
The other factor besides the holdings at play here is the leverage that the fund utilizes. They didn't have to delever through the crash. However, they did reduce leverage by some; from roughly $439 million to ~$419 million. That was from their last Annual Report to their latest Semi-Annual Report.
Since the losses were much steeper in the lows... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ISHARES S&P US PREFERRED STOCK INDEX FUND 37.21   0.0 0.00 2.08 5.60
SOUTHERN COMPANY 59.99   14.0 4.28 2.48 4.19
EDISON INTERNATIONAL 72.54   0.0 -0.77 2.45 3.37


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