CEFL Now Yielding 22.5%

The UBS ETRACS Monthly Pay 2x Leveraged Closed-End Fund ETN (NYSEARCA: CEFL) and YieldShares High Income ETF (NYSEARCA: YYY), which is based on the same index and thus has the same components as CEFL, but without the 2X leverage, will soon declare monthly dividends for November 2014. My projection is that CEFL will declare a dividend of $0.4279 in November. As an ETN, the management of CEFL has no discretion with regard to dividends and must pay exactly the amount as specified in the offering documents based on the dividends paid by the index components. YYY is an ETF where the management has discretion and only has to ensure that on an annual basis distributions meet the Investment Company and IRS regulations. Therefore, YYY has paid $0.17 every month this year so far, and can make up any differential between their net investment income and distributions at the end of the year or other periods they choose. Thus, it does not make much sense to attempt to forecast YYY dividends on a monthly basis.Knowing the dividends that each of the 30 closed-end funds that comprise the ISE High Income Index will pay allows us to predict the monthly CEFL dividend. As is shown in the table below, of those 30, there are now only 4 that pay dividends quarterly, while the other 26 pay dividends monthly. Two months ago there were 8 of the components that paid quarterly. The change is the result of the decision by 5 BlackRock funds to switch from paying dividends quarterly to monthly. One of the... Read more