Rocky’s Weekly Stock Picks
It’s Labor Day weekend, and markets will be closed on Monday. This hardly matters, as we’re looking to beef up holdings of CEFs, on DRIP.
The goal here is to not realize any gain while increasing our available margin.
Speaking of unrealized gains, have you heard of this proposal to tax unrealized capital gains? Ridiculous nonsense. Let that serve as a reminder that the images and sounds that your television produces are not real.
*Prices are semi-current as of 9:00 AM , 8/30/2024
CRF - $7.77/share, 16.5% annualized return distributed monthly. Though you can expect double-digit yields from this fund, 16% is a bit high and is derived from previous distributions.
We see that current distributions are lower than the previous several quarters. No worries, we’re still gonna be hitting that 10%+.CLM - $7.54/share, 17.28% distributed monthly. Again, double-digit yield is normal despite this figure being skewed too high. As with CRF, we see that past distributions were larger than the most recent.
RIV - $12.38/share, 12.49% annualized distributed monthly.
We would like to point out these funds also have expense ratios. 3.72% for RIV. WOW. That’s nuts. At the end of the day, though, you can still feel good about a realized 8-10% gain.
Rather, an unrealized gain. Put that bad boy on DRIP.GECC - $10.60/share, 13.21% annualized distributed quarterly. Not a closed-end fund, this is a BDC. Double-digit yields are normal here.
Going back to CEF’s for a moment, we suspect that falling interest rates play a role. We would need to review the annual reports more closely to see what the actual impact is, but generally speaking any fund is going to have some percentage of fixed-income assets.
In any case, from an amateur perspective, buy/hold/DRIP.ECC - $9.98/share, 19.3% yield distributed monthly. Just off the cuff, we already know that the realistic yield is about 10%. Upon further inspection, we see an expense ratio of 9.53%. Jesus!
But hey, that’s alright. We wouldn’t want to mess with a fund putting out 19% with a 1% expense ratio.
Unrealistically high returns generally are a massive red flag. That’s not to say there isn’t a certain kind of investor that can make money off those situations, but that’s not us. And it’s definitely not you.
….and if it is you, why are you even here?
At the end of the day, though, any investment is usually better than no investment. Just don’t drop YOLOs on pink sheets and penny stocks, and you should be alright.
