3 Telltale Signs An 8%+ Dividend Is Built To Last

Core Viewpoint - Closed-end funds (CEFs) are attractive investment options primarily due to their high income potential, with an average yield of 8.6% [3] Group 1: Investment Appeal of CEFs - Many CEFs maintain high yields of 8% or more without cutting payouts for years, and some have even increased their dividends [3] - The average stock market return is around 10.6% per year, allowing CEFs that invest in stocks to theoretically sustain their payouts by distributing profits as dividends [4] - The concept of funds generating profits and translating them into income for shareholders is a long-standing strategy among wealthy investors [5] Group 2: Evaluating CEFs - The Liberty All-Star Equity Fund (USA) is highlighted as a potential investment, offering an 11.4% yield and a 14% annualized return over the last decade [6] - Portfolio quality is crucial; USA holds large-cap US firms, including NVIDIA, Microsoft, Capital One Financial, and Visa, making it appealing for bullish investors [7] - The fund's discount to net asset value (NAV) is currently at 8.3%, near its widest level in five years, indicating a potential bargain for investors [8][9] Group 3: Dividend Analysis - USA has a strong track record of dividend payments, having raised its payout since the 2008 crisis, although the payout can fluctuate as it aims to return roughly 10% of its NAV annually [11][12] - The management's strategy allows for flexibility in stock purchases, enhancing the fund's ability to maintain dividend payouts [12] Group 4: Broader Market Context - There are nearly 400 CEFs available, covering various asset classes, and many are currently discounted despite a rising broader market, presenting opportunities for high-yield investments at lower prices [14]