Dividends4Life: Cheap, High-Yielding CEFs to Buy

Cheap, High-Yielding CEFs to Buy

Posted by D4L | Monday, September 15, 2014 | | 0 comments »

If you’re a conservative investor at or nearing retirement, income is probably high up on your hit list — and that’s why closed-end funds (CEFs)are worth looking into right now. CEFs are similar to mutual funds in that you’re getting access to a portfolio of equities, bonds or other investments. Unlike mutual funds, CEFs issue a limited number of shares at their inception which then are traded on an exchange. As a result, CEFs can trade at a discount (or premium) to the value of the actual assets under management. And right now, many CEFs are trading at a discount.

Income investors love CEFs because they can pay high distribution rates quarterly or even monthly — although those distributions can be comprised of dividends, capital gains or return of capital, and if so, they won’t be taxed as dividends, but as ordinary income, which has a higher rate. That doesn’t mean CEFs as a whole are bad — it just means that it pays to be choosy. So, here are three closed-end funds you can feel good about: Source Capital (SOR), Western Asset High Income Opportunities Fund (HIO) and Gabelli Equity Trust (GAB).

Source: InvestorPlace

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- Early Warning Signs of a Dividend Cut

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