Payback Periods For Discount CEFs With Dividends

Part of the allure of dividend-paying securities is that they pay back your initial investment directly. Amazingly, many closed-end mutual funds have distribution rates that are so high that at current values the sum of future dividends would equal your initial investment inside of a decade. I estimated the next thirty years of dividend payments for CEFs listed at a discount by the closed-end fund association as of October 28th, 2011. This calculation takes into account fund expenses, and that many CEFs distribute capital (principal funds) in addition to income, which makes the future base for dividends in the fund shrink over time. Here is a table of CEFs that pay back investors inside of 30 years: Closed-End Fund Market Return Discount Exp Ratio Income Only Yield Div Yield Required Return Payback Period First Tr Active Div Inc (FAV) -6.40% -6.41% 1.66% 11.34% 13.25% 11.9% 9 years Wells Fargo Gl... Read more