Important Updates for Investors
Carla Pasternak's Premiere Issue of High-Yield International Just
Released
Income expert Carla Pasternak's debut issue of High-Yield
International covers a Taiwanese manufacturer yielding 9.5%... a
rare Mexican monopoly yielding 13.4%... and other top-performing
investments yielding up to 19.0%.
Government's Biofuel Timetable Could Spell +15,900% Growth
+15,900% growth might seem far-fetched... but it's not. In fact, it
is mandated by law. And I've identified the ONLY stock positioned to
capture this growth.
The
Silver Lining to a Falling Dollar
Despite the U.S. national debt, there is a silver lining for income
investors. This massive spending, combined with movement out of U.S.
Treasuries, is going to take its toll on the dollar, and
international income investors could reap the rewards in the form of
higher dividends. |
|
|
|
| Are
Managed Distribution Policies Right For You? |
Published: October 3, 2006
What could be wrong with buying
a fund with a "managed" distribution policy? After all, this
policy is a promise to pay you a fixed amount every month or quarter.
Many closed-end
funds adopt this policy to make their distributions -- and hence
their share prices -- more stable. Here's how it works:
To avoid taxation, many closed-end funds return most of their income to
shareholders. The problem is their income (especially the capital gains
portion) can vary greatly from month to month. As a result, dividend
payments to shareholders may also vary. Since the market hates
uncertainty, particularly when it comes to dividend payouts, a fund's
share price could suffer if its dividends fluctuate significantly.
|
Register
for Carla Pasternak's High-Yield Investing newsletter
today and you'll receive as many as SIX in-depth research reports absolutely FREE!
|
|
Some funds attempt to avoid
this problem by employing a "managed" distribution policy. By
pegging the distribution to a certain percentage of its portfolio value
(usually around 10%), fund managers can keep shareholders happy with
regular, reliable payouts.
That's the good news. But you've got to ask where the cash to pay
dividends comes from, if the entire payout isn't necessarily from
regular interest income or capital gains.
Aye, there's the rub. When the fund promises investors more than it
earns from investment income or capital gains, it generally makes up for
the shortfall by dipping into investment capital. Imagine if you
consistently dipped into your savings instead of letting it generate
interest income. You would gradually erode your capital base, leaving
less and less to generate interest for you in the future.
|
Editor's
Note: Carla Pasternak's model portfolios focus exclusively
on investment opportunities with ultra-high yields. In fact, in each
of her monthly High-Yield Investing newsletters she
provides readers with an entire portfolio of stocks, funds and
preferreds that are delivering annual dividend yields of +10% or
more. That's right -- in order to even be considered for
inclusion in this portfolio, an investment
must deliver cash payments of at least 10% per year. Visit
this link to learn more about Carla Pasternak's High-Yield
Investing newsletter.
|
The same thing happens when a fund manager chips away at the fund's
portfolio capital to pay out dividends. If the practice continues for
long periods of time, it can reduce the fund's net asset value (the
value of all the fund's holdings), which may eventually hurt the share
price.
That reasoning was behind our decision to sell Cornerstone Total Return
(AMEX: CRF, $18.30) in our September 2006 issue of High-Yield
Investing. You can
see the dramatic decline in the fund's portfolio value from the chart
below.
Surprisingly, the chart also shows how the shares have continued to
attract yield-starved investors, despite shrinking portfolio values. As
a result, the shares are selling at a lofty premium to what the fund is
really worth -- a situation that we believe is unlikely to last for very
long.
Not all funds with a managed
distribution policy should be off-limits, though. Instead, investors
should evaluate how each individual fund derives the capital it
distributes to shareholders. An important feature to look for in a fund
with a managed distribution policy is if the portfolio value is
increasing or at least holding steady. This shows that the security
should have plenty of assets to allow it to make payments well into the
future.
Although there is significant risk associated with managed distribution
policies, if you're seeking to juice portfolio returns, then the dozen
or so funds we've listed below may be of interest to you. They each
carry yields of 8% or more, and we've carefully handpicked them. Each
fund enjoys a stable or growing portfolio value, as well as a share
price that is trading in sync with its net asset value . . .
Important Note: Throughout the remainder of this
article, editor Carla Pasternak provides a list of her 14 top picks with
a managed distribution policy. However, in order to view the
remainder of this article, you'll need to subscribe to our premium
income-oriented newsletter -- High-Yield Investing. After
you subscribe you'll receive immediate access to this full article, as
well as our monthly High-Yield Investing newsletter and a
host of additional premium content. Please visit one of the following
links to continue...
Good investing!
Carla Pasternak
Editor
High-Yield Investing
http://www.StreetAuthority.com
| To
receive in-depth guidance on today's leading income investing
opportunities each month, plus access to several model portfolios,
please subscribe to Carla Pasternak's premium newsletter -- High-Yield
Investing. |
Carla
Pasternak draws on a variety of financial backgrounds to make profitable
calls on income-generating stocks for her readers.
Carla has
been employed in the investment industry for more than two decades. In
addition to her work as a writer for several other nationally recognized
financial publishers, her previous experience includes a position as
President of a well-respected investor relations firm. She has also been
writing shareholder reports for public companies (annual reports,
speeches, corporate profiles, slide shows, etc.) since 1980.
A highly
successful investment analyst, Carla specializes in high-yield,
income-paying stocks. In that pursuit, she's always mindful to select
companies that not only pay rich dividends, but that also have the
potential to deliver strong long-term capital gains.
On the
educational front, Carla holds both MBA and Ph.D. degrees. When she's
not watching the market, she's teaching business courses at the college
level and managing several million dollars in portfolio assets.
|
|
Investing Doesn't Get Any Easier Than This |
Stock picker Amy
Calistri's strategy is as simple as investing gets -- just one idea
a month designed to make money in today's market. Invest this way
and you don't have to worry about oil prices, automaker bailouts, or
what the Fed is up to -- because every "bad" economic development
actually helps some investment or another.Your investing life can
get a lot simpler -- starting today.
Go here to learn about Amy's simple investing strategy.
|
|
|
