Delaware's Dividend and Income Fund: A Balanced, Closed-End Fund Available at a Discount

Mar. 1.11 | About: Delaware Investments (DDF)
The Delaware Investments Dividend and Income Fund (NYSE:DDF) is a balanced closed-end fund that seeks current income through investment in equities and fixed income. Capital appreciation is a secondary consideration.
DDF is currently selling at a discount to NAV of -6.20% (as of Feb 28, 2011) which is the maximum discount over the last year. The 1-Year Z-Statistic is -1.70. This means the discount to net asset value is 1.70 standard deviations below the mean.
DDF uses a team management approach with experts on different teams managing a portion of the assets. There is a team for Large Cap Value, Total Return Fixed Income, Taxable Fixed Income, Convertible Bond Strategies and High Yield Fixed Income.
DDF is attractive now as a conservative income play, especially in an IRA account. I believe there is a good chance that the discount to NAV may narrow by as much as 5% over the next few months which would add to the total return. One slight negative is the low average daily trading volume which makes it preferable to scale into DDF gradually over time.
Asset Class Breakdown (as of 11/30/2010)
Common Stock
67.25%
Convertible Pfd
2.14%
Convertible Bonds
12.67%
Corporate Bonds
43.35%
Securities Lending Collateral
15.29%
Other
2.72%
Obligation to Return Securities Lending Collateral
-15.51%
Borrowing under Line of Credit
-27.91%
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Top 10 Equity Holdings
National Oilwell Varco (NYSE:NOV)
2.12%
Cardinal Health (NYSE:CAH)
1.63%
ConocoPhillips (NYSE:COP)
1.62%
IBM (NYSE:IBM)
1.59%
Chevron (NYSE:CVX)
1.59%
Verizon (NYSE:VZ)
1.58%
Baxter Intl. (NYSE:BAX)
1.58%
Progress Energy (NYSE:PGR)
1.57%
Comcast Class A (NASDAQ:CMCSA)
1.57%
Travelers (NYSE:TRV)
1.56%
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Ticker: DDF Delaware Investments Dividend and Income Fund
  • Total Net Assets = 111.2 MM Total Common Assets = 79.9 MM
  • Annual Distribution Rate = 8.63% SEC Yield = 4.88%
  • Dividend Frequency = Monthly
  • Current Monthly Distribution = $0.0575 per share ($0.69 per year)
  • Baseline Expense ratio = 1.19% (before interest expense)
  • Discount to NAV = -6.20%, 6 Month Avg Discount = -2.46%
  • Portfolio Turnover rate = 62%
  • Effective Leverage = 28.3%
  • Average 3 Mos Daily Trading Volume = 17,475 (about $140K)
Disclosure: I am long DDF.