A Strategic Approach to Maintaining a 8% Dividend During Market Turmoil
Hey there! So, the market's been acting wonky lately, huh? I mean, who wouldn't expect some turbulence when the economy's sending mixed signals, amirite?
Now, I'm all about those fat dividends, and that's why we're gonna be talking about a couple of nifty options that'll help us ride out this volatility wave. We're gonna be looking at the Cohen & Steers Tax-Advantaged Preferred Securities and Income Fund (PTA) and the PGIM Global High Yield Fund (GHY).
But first, let's get a bearings on the economic terrain we're navigating. Over the last few years, the U.S economy's been trudging along pretty decently, with a growth rate around 2.5% after accounting for inflation. That's good news, cus it means the economy's stable, long-term. But don't get too comfy, 'cos markets, you know, they love taking the escalator up and the elevator down, and it feels like we've hit the hard-switch lately.
So here's the deal— there's evidence piling up suggesting we need to diversify from stocks right now. And that's where PTA and GHY come in.
Let's tackle PTA first. This bad boy pays an 8.4% dividend, and its discount to net asset value is currently at 6.8%, indicating the panic is driving its price down. PTA holds preferred stocks, which means it delivers higher, steady dividends, even in a downturn, and prefers dividends over common stocks during tough times. Plus, if the U.S economy's looking shaky, creating a weaker dollar, that's good news for PTA, cus preferred stocks, like bonds, tend to rise in value as interest rates fall.
Now, GHY. It's packing a 9.6% dividend, and its discount to net asset value has been racing toward par. This fund benefits if the U.S economy is perceived as weakening, since a weaker economy typically means a weaker dollar, and a weaker dollar bumps up the value of the foreign bonds GHY invests in. I'm calling GHY the front-runner here, due to its bigger yield and discount momentum.
In short, given the current uncertainty, these funds make solid choices for income-hungry investors. GHY's got the edge for me, but PTA ain't bad either.
Now, if you're into dividend-centric strategies, here are a few more options to check out:
- Vanguard Dividend Appreciation ETF (VIG)
- Fidelity High Diversion ETF (FDVV)
- SPDR S&P Dividend ETF (SDY)
But remember, diversifying your portfolio is crucial when markets get jittery. And always, always, always do your due diligence before jumping into a new investment!
Sources: 1. Investopedia 2. Investopedia 3. Investopedia 4. The Balance 5. Fidelity Investments
- Despite the market volatility, we can still find high-yield investment options like the Cohen & Steers Tax-Advantaged Preferred Securities and Income Fund (PTA) and the PGIM Global High Yield Fund (GHY).
- As the U.S economy remains stable long-term but shows signs of market turbulence, it's important to diversify from stocks and consider bond funds, preferred stock funds, and closed-end funds like PTA and GHY for retirement income.
- For purely dividend-focused investors in 2025, funds such as Vanguard Dividend Appreciation ETF (VIG), Fidelity High Dividend ETF (FDVV), SPDR S&P Dividend ETF (SDY), and the aforementioned PTA and GHY can provide opportunities to ride out the current economic terrain and generate income.
