I am looking into EAD, pretty small 52 week range and 10% annually back on dividends. I also like LUM, what dividend yield funds do you like? Looking to put about $3000 in that tomorrow

 

Keep in mind that EAD is really a high-yield bond fund. As such, there is a fair amount of risk attached to it. Virtually all the companies whose bonds they buy are in some degree of financial trouble, which is why they pay those high yields. In an economic downturn of any size (or even just an economic "flattening" some of these companies could find themselves in bankruptcy. Understand the risks you're taking and recognize that nothing is free.

http://www1.evergreeninvestments.com...go?k=900100032

 

Yes I realize it is a junk bond fund, thats why I was thinking of maybe actually going with a high dividend yield stock such as lum.

 

LUM is basically a fund that invests in various mortgage-backed securities, using some degree of leverage. As such it's also pretty much a fixed income investment. Their holding are somewhat different than you'd find in a junk bond fund, but ultimately similar issues: credit quality, defaults and leverage come into play. They are related to Seneca Capital Management, who are a decent bunch of mutual fund managers, but LUM is set up as a seperate company so as to take advantage of the special rules that apply to Real Estate Investment Trusts (REITs). The management of Seneca seem to be OK people but I don't know much about they. The peformance of their other funds has been mostly OK, not spectacular.

If you really want exposure to a top-notch mortgage company, look at NLY. Extremely respected mangement with a great track record and a very good yield. That's not to say that there aren't some risks attached to them as well, but you have some confidence in the management and their history. It's often been a favorite of Jim Grant's, though he and others have more recently become somewhat bearish on anything to do with the overall mortgage market. The carry trade that has caused these investments to do so well in recent years is already winding down as the yield curve flattens.

Again, nothing I can see against LUM other than the fact that it's been around for less than two years. Since the management is known and has OK credentials I don't hold that against them. But again, understand the risks. Dividends are not a sure thing, especially when they're directly tied to a fixed income market.

 

Thanks for your help venice

 

If you want ideas about stocks and not funds, here goes:

MRK, BMY, PFE. May never see these growth stocks this cheap again. As the saying goes, the best time to buy is when there is blood in the streets.

 

Thanks but I am looking for 8% or higher

 

Look to some preferred stock funds. Some of them may still be yielding at those levels, but probably not many. These days you can't get that kind of return without taking on significant risk or leverage.

Keep in mind that a nasty fall in the stock price can wipe out years of dividend returns, so even if the dividend payment is safe, you want to be careful about underlying investments that can fall substantially if there's a change in some condition.

 

The big question is whether these guys still represent the growth in the pharma industry, or if that's going to come from other areas (most notably biotech) and these guys will have to pay through the nose to acquire pipelines from external sources.

I own BMY, so I'm not entirely negative, but I think some caution is warranted. All these guys have long term problems unless they acquire some useful R&D and more immediate costs if they do choose to go out and start buying R&D.

 

Caution and DD are always indicated when playing with real money, especially if it's your own. Pfizer in particular is using most of it's billions in free cash flow on R&D and buying up small biotechs. Pfizer has 27 new products in the final phase of approval to be introduced over the next three years.

 

I agree. And the price is now approaching a point where I think it represents a decent value. Definitely one I have my eye on, but I'm not quite ready to pull the trigger.

Remember that making money in the market is not about buying "good companies." It's about buying good companies, at a good price, and selling them when the price is no longer so good. By my analysis, PFE has been somewhere in the middle, and trending down for about a year, so I wait.