Mutating The Hybrid Dividend Income Portfolio: Stocks Out, CEFs In

Back in 2015, I presented my Hybrid Dividend Income Portfolio. It is "hybrid" because although most positions are income-focused, I also maintain some valuation plays that I believe might generate additional capital to feed new income segment purchases. At the time, I was looking for a yield between 4% and 10%, and a relatively cheap valuation based on metrics like P/E ratio, and AFFO (adjusted funds from operations) in the case of real estate investment trusts. Diversification across business sectors and geographic zones was also a priority. I subsequently got very busy managing the portfolio, and did not update it here on Seeking Alpha.
Income Segment: Replacing individual stocks with closed-end funds (CEFs) and ETFs
Since then, a lot has changed. Quite early in the process, several accidents with individual stocks highlighted the extreme volatility that can accompany dividend cuts or commercial operating problems. I concluded that given the level of income I was seeking, I should diversify away most of the individual stock risk by opting for closed-end funds (CEFs) or exchange-traded funds (ETFs).
Most of my income positions are now CEFs, which offer a complex set of advantages and disadvantages. On the plus side, they can often be bought at a discount to net asset value (NAV), pay high distributions, and are not required to sell assets at the bottom when investors rush for the exit. They can also cover a wide range of business sectors and geographic regions. On the... Read more