NCV has paid a regular dividend of $0.125 per share every month since inception in 2003. It also dishes up a year-end capital gains payout. With a total payment of $1.50 over the past 12 months, the fund offers a yield of 11.5%.

A management fee of 1.27% of the fund's asset value trims your total returns. Most of last year's dividend was taxed as ordinary income, but about 19% qualified for the reduced dividend tax rate and 12% as long-term capital gains, taxable at the 15% rate.

Allianz Global Investors fund managers maintain a dividend reinvestment program, and you can contact them at 1-800-331-1710.

Nicholas-Applegate Convertible & Income Fund has produced total returns (including distributions) of around +12% annually over the past three years, beating more than a third of the funds in its category. So far this year, the portfolio has grown a healthy +9% with reinvested dividends. But investors grew wary of high-yield investments like NCV in the aftermath of this summer's subprime mortgage crisis. As a result, the fund's market value returns with reinvested dividends are far lower at -5% year-to-date.

The shares were trading at a premium for a year and a half -- until they nose-dived this summer amid the subprime mortgage meltdown. They can now be scooped up at a -4.3% discount, giving you a dollar's worth of assets for just 96 cents.

Action To Take ---> Given its growing portfolio, the fund should continue providing steady double-digit returns over the long term. The discounted share price may provide an opportune entry point for an investor seeking a steady income stream and willing to tolerate some volatility in the share price.

Carla Pasternak
Editor
High-Yield Investing

About High-Yield Investing

High-Yield Investing is a monthly investment newsletter that brings you a wealth of information on the market's leading income stocks and funds, as well as a host of relatively unknown investment options that you probably won't find coverage of anywhere else. Many of these securities provide investors with annual dividend yields of 10%, 15%, even 20% or more. The newsletter not only provides subscribers with investing ideas that produce incredibly high dividend yields, but the kicker is that these high-yield investments have also consistently outperformed the major market averages. (Learn More)

About Carla Pasternak

Editor of StreetAuthority.com's High-Yield Investing newsletter since its inception in May 2004, 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 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 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 deliver strong long-term capital gains. Furthermore, Carla's experience in writing SEC filings gives her the added insight required for her to truly understand a company's current and future financial health.

On the educational front, Carla holds BA, MA, MBA and Ph.D. degrees. When she's not watching the market, she's teaching business courses at the college level and managing millions of dollars in portfolio assets.

To learn more about Carla Pasternak's premium income investing newsletter -- High-Yield Investing -- please visit this link.