I’ve been doing some ‘due diligence’ on the Gabelli family of closed end funds and thought I would remind those looking for an ultra safe dividend that is in some cases right close to 6%,
CEFs have to have a minimum asset coverage ratio of 200% on their ‘senior securities (preferreds) and the Gabelli family of funds, which includes the Bancroft Fund (BCV) and Ellsworth Growth and Income Fund (ECF) always provide very nice coverage ratios–in some cases up to 876% (GAMCO Global Gold–GGN).
But like all lower coupon, high quality issues the share price will move in the opposite direction of interest rates, so if you are sensitive to share price movement these probably aren’t for you. On the other hand if you want a solid dividend–ultra solid actually, one should be in some of the Gabelli Family preferreds.
I have a page devoted to CEF preferreds with the coverage ratios posted on it which can be seen here.
Also Gabelli posts their coverage ratios each month and one can watch the changes on the page linked below.
Click here is see the coverages.
How did I miss this page? Is it a recent addition? At any rate I really like it! There are several that caught my eye as interesting and I need to look at harder. HFRO-A is one with a current yield of 7.99%, current price of $16.82, and coverage of 624%. It was issued at $25 paying 5.375% and Mr Market wacked it’s price to bring the yield up to around 8% I guess unless HIghland is having some issues. I don’t know much about them. EICC I already own along with SPMA. I guess I can spend some time looking through this list and pick out a couple to soak up the little bit of cash I gained recently from purging a couple of deadbeats from my portfolio. Thanks for the list Tim! Guess you had some time inside due to those cold MInnesota winters! I didn’t go outside with today in North Carolina. We were right on the edge of rain / freezing rain from the big storm. We instead got a cold rain with the temperature hovering around 33 degrees. Guess Minnesotans would have been running around in tee shirts and shorts if they had a day like that though………..
Here’s a recent posting of Tim’s about HFRO:
https://innovativeincomeinvestor.com/cef-highland-opportunity-and-income-fund-tenders-for-common-using-preferred-shares/ .
Sailor, Good example of a preferred with a 5,375% falling off the cliff since Nov. when people realized Treasury rates were not looking like they would fall farther. Now yielding almost 8% that’s a 3% difference or more to what you can get in treasuries. Maybe worth the risk and possibility of some capital gains. On the other hand you could be catching a falling knife. Someone willing to be quick moving in and out of trades might make money flipping it.
Hard for me to read the tea leaves right now.
Private mentioned new jobs added in China were all government and compared to US with 1/3rd the people we look pretty good, yet almost every year this time unemployment rises in the US as Holiday workers get laid off, Then you have the news that major banks have written off 49 Billion in credit card debt as default rates rise.
Call me chicken, I have done more sales than buys the last month even taking a loss on a couple I recently purchased to build up cash. Bothers me that several I purchased were falling going into ex-dividend date instead of rising when dividend collectors normally drive up prices. Now this isn’t true of all dividend stocks. Some in gold and energy have been rising.
Just the feel i’m getting from what the herd is doing.
Tim,
I’m glad you posted this. I had been buying a few of these, looking for the ones that may pay out qualified divs or cap gains primarily.
Today ,I received Fidelity’s posting of a taxable housing issue due in 2055 AAA
at an estimated 6.20%.
I’m just comparing yields on things unlikely to ever risk default and praying we can keep inflation under control
Didn’t know about the CEF list, doesn’t appear on the list.
Please include this list with pref & bonds etc.
Thanks
the only issue with low yield fixed rate preferreds is – as interest rates go higher, prices go lower.
Currently I don’t see a reason to own the Gabelli preferreds when there are other CEF preferreds easily yielding 1% or more higher.
DavidZ–somewhat meager yields, but sleep well with them
BINGO … same here
If I was investing enough for the 1% to make a difference, I would have enough not to care about a 1% difference.
However, I can’t invest enough for the 1% to make a difference, so I can’t care about a 1% difference.
(Yes, that made sense in my head)
The solution to not caring about the 1% could be as easy as getting a lot older!
Falling prices are not a loss unless you sell, otherwise you continue earning the dividends you paid for. Default risk practically non-existent.
Tim,
Never knew of that page, has a lot of useful information.
Is it one of the popular pages and if so which one.
Jaberstein—it is linked in the ‘Preferred’ tab at the top of the page.