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Neglects to mention that some if not most of this dividend income may be from return of capital, so while your income is payed out, the value of the underlying investment decreases by the amount of capital required to pay you the dividend. There is a Ponzi-ish dimension to return of capital dividends, even though these may in fact be good funds in other regards.
Actually, I'm looking at recent years for these funds and it seems like recently most of the dividend has come from distributed capital gains, not return of capital. Still, at the end of day all that matters is the total return regardless whether that return is paid out as a distribution or not, assuming one is unconcerned about taxes. If taxes are a concern, then the distribution could actually lower one's total return.
The title said it all and investors should ask how and where does that level of dividend come from. Even in open end mutual funds there are years where the sizable year-end distribution came from capital gain, even though they may be long term CG. CEFs are less transparent on this matter.
JohnN has long been noted for a rather simplistic perspective on investing. He prefers almost anything with an advertised high interest rate, irrespective of any other detracting qualities. This is not a criticism of his approach- for all I know, he is doing very well. It's just that you need to interpret his posts with his mindset as a consideration.
I happen to own USA as a small percentage (<2.0%) of my dividend growth portfolio. I couldn't afford to buy many of their top holdings outright so I saw this as a way to gain a foothold while getting a little back in return. The author stated that it is run by 5 managers however the company website says: "Multi-managed fund that allocates its portfolio assets on an approximately equal basis among several independent investment organizations (currently three in number) having different investment styles and/or strategies recommended and monitored by ALPS Advisors, Inc., the Fund's investment advisor."
As Lewis noted nearly all of the return comes from LT capital gains. The last time it returned capital was in 2014 and that was roughly $0.07/share.
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As Lewis noted nearly all of the return comes from LT capital gains. The last time it returned capital was in 2014 and that was roughly $0.07/share.