Monthly-Pay Equity CEF Yields 7.7%, 11% Discount, Activist Investor Has Large Stake

This report was jointly produced with author Julian Lin.
Thesis Aberdeen Total Dynamic Dividend (AOD), formerly named "Alpine Total Dynamic Dividend Fund," is a closed end fund (‘CEF’) with a primary investment objective of seeking high current dividend income, and a secondary investment objective of long-term growth of capital. It closed recently at $9.00 and its latest NAV is $10.09 per share. Trading at 10.8% discount to net asset value (‘NAV’), shares have received the attention of an activist fund which we believe will help drive management to close this NAV discount. It is currently paying a dividend of 5.75 cents per month for an annual dividend of 69 cents per share and a yield of 7.6%. This is an opportunity to buy shares of a high quality dividend CEF with a high 7.7% dividend yield while waiting for the closing of the NAV discount.
Some History: 2008 And The Bull Market Since Then AOD was launched in 2007 right before the financial crisis. AOD was hit hard during this tough period (as most other equities), and the current share price of $9 really does not come close to reaching the price shortly after initial issuance of around $40 per share. That said, this is a much different fund than before, with only 5.81% net current leverage compared to over 20% then.
Since the financial crisis, we have witnessed one of the longest bull rallies in history:

(Yahoo Finance)
After such a long bull run, some investors may... Read more

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