Four Discounted Funds Paying Up To 9.8% Dividends

Four Discounted Funds Paying Up To 9.8% Dividends

3D red text big sale on white background with reflection One thing we love about closed-end funds (beyond the dividends: many CEFs yield 7%+ today) is the big discounts to net asset value, or NAV, that these funds hand us. These discounts only exist with CEFs. Here's why: CEFs typically can't issue new shares to new investors after their IPOs, so their shares get bid up and down on the market, independent of how much their portfolios are actually worth. These discounts can get quite wide—sometimes 20% and higher. At that kind of a discount, we're essentially paying 78 cents for every dollar of assets the fund holds! Our plan, then, is simple: buy when we get an unusual discount like that and then ride along as it vanishes. That's in contrast to ETFs, which are free to issue new shares at will, so you never get a deal on them. Take a look at the "discounts" that have been available on the most popular ETF of them all: the SPDR S&P 500 ETF Trust (SPY). Today we're going to dive into the four cheapest CEFs on the market, all of which trade around a 20% discount. I see all