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27% Returns After a Dividend Cut? Here’s How

When this closed-end fund (CEF) lowered its monthly dividend for the first time in 17 years , many income investors (understandably) panicked and sold. Too bad for them. They missed out on 27% returns over the next 20 months . Can a dividend cut actually be a good thing ? Like life itself, it’s complicated—but my short answer is “yes.” Here’s when (and why). CEFs are the exception to the “dividend cuts are bad” rule. In CEF-Land, payouts are taken from a fund’s portfolio, which is represented by a fund’s net asset value (NAV). Sure, the funds that we buy generally have income streams that are supposed to “power” NAV higher.… Read more
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