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Financial stocks make up 50% or more
of many equity-income fund portfolios,
but can also increase risk.
Which of these funds devotes less than
20% to the financial sector -- and still
provides a hefty 15.9% yield to boot?
A.) Alpine Global Dividend (AGD)
B.) Kayne Anderson Energy
Total Return (KYE)
C.) Vanguard Dividend
Appreciation (VIG)
D.) WisdomTree Europe
Dividend (DEB)
E.) First Trust Value Line
Dividend (FVD)
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Published:
September 1, 2008
The
correct answer is
(A.) Alpine Global Dividend (AGD)
At a whopping
15.9%, AGD's yield is one of
the largest around. And because
management doesn't use leverage or
options, it's also one of the most
pure.
The overriding goal of AGD is to
generate maximum current income from
dividend-paying stocks -- preferably
those qualifying for favorable tax
treatment. Whereas many
equity-income funds hold a lot of
financial stocks, AGD dives instead
into industrial, energy, telecom,
and consumer-oriented stocks. The
portfolio also gravitates heavily
toward higher-yielding markets in
Western Europe, which accounts for
about 60% of the fund's assets,
because the region carries an average yield
of nearly 5.0% -- more than double
that offered by U.S. firms.
In the end, however, the portfolio
is the end result of a unique
three-pronged attack. First, there
is the core mission of seeking
undervalued high-yield companies
with identifiable turnaround
catalysts. Next, management dabbles
in the occasional growth stock with
the potential for both dividend
hikes and significant capital
appreciation. Finally, the fund's
managers employ a dividend capture
strategy, involving precise timing
to rotate in and out of companies
about to pay dividends to "capture"
more than the standard four
quarterly payouts per year with the
same investment dollars.
AGD is a great example of why
investors are sitting on a potential
goldmine of dividend yields... and
hardly anyone knows about it. The
precipitous decline that has rattled
the global markets and forced many
to duck for cover isn't a punishing
blow -- but an exceedingly rare gift
that falls in income investors' laps
just once or twice per decade.
The multitude of ETF choices now on
the scene provides the perfect
ammunition for those looking to bag
these high-flying payouts. In a recent issue of
The ETF Authority
newsletter, editor Nathan Slaughter
profiled AGD along with some of his
other favorite high-yielding ETFs.
Income investors who want to know
the names of these funds and learn
more about The ETF Authority
should be sure to
visit this link.
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