Recommended Paired Trade for a 14% Annual Distribution Yield

I recommend a paired trade with a long position in two securities. The first is Gabelli Global Gold, Natural Resources & Income Trust (GGN), a closed-end fund that's owned for insurance against U.S. monetary inflation and to proactively participate in the Federal Reserve's quantitative easing policy. The second is American Capital Agency (AGNC), which pays a significant dividend based upon the Federal Reserve's intent on keeping U.S. Treasury Bond interest rates artificially low. Both GGN and AGNC pay significant distribution yields whilst mitigating risk by owning both in tandem. GGN pays a 14-cent monthly distribution, which equates to a $1.68 annual payout. I typically focus upon closed-end funds with a 10% annual distribution payout, and selling at a discount to net asset value. GGN is an anomaly to this rule. GGN offers a 9.3% per annum distribution yield while trading at $17.96. GGN's net asset value is currently $17.41. The... Read more