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Post by stripermannh on Feb 20, 2023 17:08:39 GMT
I own PDT and have been considering buying more. The current yield on this fund is about 9%, pretty good. They have been paying the same distribution amount since 6/2016 and that was an increase over previous distributions. BUT... I'm concerned that the distribution is no longer being covered by income. Starting January 2022, for the first time ever, Return of Capitol is being used to make up for the lower income to cover the distribution. Other trend information isn't looking great either. Should the fact that they are now using ROC to cover distributions be of serious concern?
Buy more, Hold or Sell?
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Post by gman57 on Feb 20, 2023 18:17:38 GMT
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Post by marpro on Feb 20, 2023 18:24:48 GMT
CLM could not survive with ROC for the past two years. First, they rearranged the NAV using new shares and diluting its value to almost 1/2 in 2022, but its NAV keeps going down and down in the down market. PDT seems to be a dividend fund, and seems to be surviving better for now with ROC. If there is CG, ROC is not bad. PDT price seems to be following the market. But, in the current conditions, ROC is bad but, who knows how the market would be in six months? That is the 64 million question. No one knows the answer to the OP.
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Post by uncleharley on Feb 20, 2023 19:03:22 GMT
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Post by marpro on Feb 20, 2023 19:16:52 GMT
Exactly. No one knows. I assume that it will be range bound (IMO), just like the market. For now, it is ok to hold it. Although UTG pays less, I doubled my shares this month using some CG from PDI in my taxable account, because there is no ROC, and mostly, CG. Not bad, because it has been range bound for a few months. I never wanted to cash out the CG either because why kill something that keeps on paying every month with some tax efficiency? So, I am going to let it grow. |
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Post by richardsok on Feb 20, 2023 19:22:26 GMT
PDT recent coverage stats: Nov 80% from income Dec 60% from income (40% ROC) Jan 80% ROC Feb 80% ROC Some comparison numbers for previous four months; average coverages: PSF 85% coverage from income FFC 100% coverage from income PFFA 100% coverage from income percentages approximate. Source: Schwab.com |
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Post by uncleharley on Feb 20, 2023 19:35:47 GMT
An additional thought about that weekly chart is that the increased trading volume of recent weeks does indicate increased interest in the fund. You might check the news and/or insider activity over the past month. That should tell you if you should buy or sell.
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Post by steelpony10 on Feb 21, 2023 13:26:04 GMT
stripermannh , CEF distributions can vary. PDT has top notch management so at least a hold. I’m assuming you just use this investment for monthly income. The way around this CEF characteristic is to diversify your holdings and create excess to needs income which you store safely or reinvest to assure a steady but lower monthly income requirement. You may be overthinking a future unknown of which you have no control or factual solution. It’s not that significant a “problem” to solve. Press the easy button.
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Post by stripermannh on Feb 21, 2023 13:44:27 GMT
stripermannh , CEF distributions can vary. PDT has top notch management. I’m assuming you just use this investment for monthly income. The way around this CEF characteristic is to diversify your holdings and create excess to needs income to assure a steady but lower monthly income. You may be overthinking a future unknown of which you have no control. Yes I do use this for monthly income. The variations in price can be uncomfortable but changes in the distributions are the real concern (unless they go up!). I try and keep thing in perspective. Past performance of this fund is impressive. If they did cut the distribution by 5, 8, 15, 20% the yield still wouldn't be too bad. As the CFO of my household I'm just trying to make the best choices while continuing to increase my investment knowledge. Reading and engaging in investment boards like this one help in keeping me from repeating past mistakes and ones I never considered. Unfortunately life's hardest lessons typically involve pain or the loss of money. I can only hide the loss of money and frying pans from my wife for so long!  Thanks for everyone's input. I think I'll wait a bit and let my excess cash continue to earn ~4.5% in the brokerage money market account. |
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Post by mnfish on Feb 21, 2023 13:52:19 GMT
FWIW - Wells Advisors has PDT on its Sunset/Sell list as of Feb 7.
Currently recommending JPC and JPS for Preferred CEFs
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Post by marpro on Feb 21, 2023 16:30:12 GMT
PDT is still holding better compared to the other bond income funds, such as PDI, PDO, ... and stock equities.
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Post by steelpony10 on Feb 21, 2023 16:39:50 GMT
stripermannh , CEF distributions can vary. PDT has top notch management. I’m assuming you just use this investment for monthly income. The way around this CEF characteristic is to diversify your holdings and create excess to needs income to assure a steady but lower monthly income. You may be overthinking a future unknown of which you have no control. Yes I do use this for monthly income. The variations in price can be uncomfortable but changes in the distributions are the real concern (unless they go up!). I try and keep thing in perspective. Past performance of this fund is impressive. If they did cut the distribution by 5, 8, 15, 20% the yield still wouldn't be too bad. As the CFO of my household I'm just trying to make the best choices while continuing to increase my investment knowledge. Reading and engaging in investment boards like this one help in keeping me from repeating past mistakes and ones I never considered. Unfortunately life's hardest lessons typically involve pain or the loss of money. I can only hide the loss of money and frying pans from my wife for so long! Thanks for everyone's input. I think I'll wait a bit and let my excess cash continue to earn ~4.5% in the brokerage money market account. Well don’t chase yield but do wait until the real facts unfold then adjust if you need to when dealing with CEF’s, or anything really. You want to know what’s going to happen to the right of charts which you most likely won’t most of the time. Investing becomes easier adjusting to your needs after facts unfold. |
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Thanks for everyone's input. I think I'll wait a bit and let my excess cash continue to earn ~4.5% in the brokerage money market account.