Every week, we’ll profile a high yield investment fund that typically offers an annualized distribution of 6-10% or more. With the S&P 500 yielding less than 2%, many investors find it difficult to achieve the portfolio income necessary to meet their needs and goals. This report is designed to help address those concerns.
A lot of investors received a hard lesson over the past month about the risk of unexpected market volatility and portfolio over-concentration. Loading up on magnificent 7 stocks works well when conditions are in their favor, but when the market turns, all bets are off. The S&P 500, which is tech-heavy in and of itself, fell more than 8% from its July high, but the mag 7 collectively fell by about 18%. Diversification, even in the best of times, is important. I often say that you’re not really diversified unless there’s something you hate in your portfolio. The mag 7 correction demonstrated why it’s important.
One of the easiest ways to diversify is via dividend stocks. You know, the boring old companies that are able to pay predictable dividends. It’s not exciting, but long-term, it tends to work. The abrdn Total Dynamic Dividend Fund (AOD) has a few things working in its favor at the moment. It maintains a high degree of flexibility, so it can move wherever the current opportunities are and it just raised its distribution by a whopping 70%! But there’s a lot going on beneath the surface - a change to the distribution policy, a proposed acquisition of another fund and activist investors sniffing around. The fund’s strategy of investing in dividend stocks is simple enough, but this isn’t a simple situation.
Fund Background
AOD’s primary investment objective is to seek high current dividend income. It also focuses on long-term growth of capital as a secondary investment objective. As mentioned, the fund’s selection strategy is quite simple. It invests in a global portfolio of stocks that pay dividends. It uses a modest amount of leverage in order to enhance yield and total return potential.
Let’s take a minute to talk about what’s going on around the fund itself.
