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Strategies & Market Trends : Young and Older Folk Portfolio -- Ignore unavailable to you. Want to Upgrade?

To: macbolan who wrote (7805)	8/9/2024 7:11:27 PM
From: SeeksQuality	3 Recommendations Recommended By Fireball Dividend jopapgh Markbn Read Replies (1) \| Respond to of 21959

Some CEFs base their distribution (or cap their distribution) as a percentage of NAV. When the NAV falls, the distribution will fall with it. Do you prefer a distribution that is maintained as the NAV declines until it is slashed 50%? Or do you prefer a distribution that walks down with the NAV, eventually rebounding? Either way the distributions are likely to be higher than the dividends you'll receive from something like SCHD (which distributes dividend income and just the income). A CEF with declining NAV will eventually need to reduce the distribution. The declining NAV is a sign that the distributions exceed the income+gains for the fund, and that cannot be maintained indefinitely. If you want a stable and increasing dividend, CEFs aren't the place to look! They are good for delivering MUCH higher distributions, but as a result they are inherently less certain. That said, some CEFs have done very well for a long time. My father had some shares of RVT -- which were annoying because they were held through a transfer agent, part in certificate form and part in book entry form, and EVERY step of the process was annoying. Plus we had only a faint idea of the cost basis involved. But the fund itself is a solid way to invest in small caps.

To: macbolan who wrote (7805)	8/10/2024 6:07:13 AM
From: jritz0	Read Replies (1) \| Respond to of 21959

" I don't know, if I start seeing one of the CEFs I hold changing its distribution monthly like an ETF or Mutual fund, I may have to get out of it. Unless it keeps getting adjusted up that is.... :-)" I don't have a problem with distributions changing from month to month. Usually when I get the distribution change notice from SSD the yearly difference is trivial. That is different from a CEF that cuts a distribution 20- 30%. I don't know what fund you saw that changes monthly but I'm sure I don't own it. I would assume it wasn't an equity CEF. You are keeping yourself from investing is some very good ETFs with a policy like that. Do you make an exception for Money Market funds? I would think the MM funds changing their distribution monthly would bother someone more because of the more immediate need for the funds. I guess someone can lock their money up in short term CDs but basically the same can happen when repurchasing for a 1-6 month CD. I was going to comment further but it looks like SQ asked the question about keeping the nav at reasonable rate as opposed to letting it diminish 20-40% then making a substantial cut. Now, go load up on all the Blackrock funds that are subject to the R.O. and except the offer to generate a little alpha. :)