Jan. 11, 2014, 9:00 AM
- Ranking about dead last a year ago in Barron's handicapping of where to go for yield, municipal bonds climb nearly to the top for 2014. Long-term issues yield 4.5-5%, towering over the 30-year Treasury at 3.8% ... and don't forget the tax exemption. Credit worries are high, but the "real news is that the credit profile of local governments throughout the U.S. will improve as property valuations rise, local sales and income-taxes increase, and major reform of public employee pension plans accelerates," says John Loffredo, co-manager of the MacKay Shields Municipal High Yield Fund.
- A few closed-end funds trading at discounts to NAV: NIO, NVG, BTT, NPM, NRK, MUC, VCV, NEA, NMA, NAD, ETX, BKN
- Muni ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, MLN, HYMB, CMF, BABZ, BABS, XMPT, SHM, SUB, PRB, SMB, PZT, NYF, CXA, PWZ, PVI, SMMU, MUAF, INY, MUAD, MUAG, MUAE, VRD, MUAC, GMMB, RVNU
- Topping the list are the best performers from last year: dividend stocks. Even after a big rally, plenty of blue chips yield more than the 10-year Treasury and payouts are still low, says S&P's Howard Silverblatt, who sees a double-digit rise in cash payouts this year.
- Dividend ETFs: DVY, IDV, VIG, SDY, VYM, SDIV, HDV, SCHD, DWX, KBWD, PID, DES, DTN, PEY, SPHD, DIV, DHS, DLN, LVL, DTD, DGRW, DON, FDL, FVD, PFM, FGD, NOBL, DOO, DOL, SDYL, DVYL, DEW, IDOG, HGI, DGRS, DNL, DGRE, DVYA, RDIV, QDF, RDVY, QDEF, QDYN, IQDF, EMDG, IQDY, WDIV, IQDE, FIEG
- Near the bottom of the list this year after a big move in 2013 are MLPs, which trade for nearly twice the valuation of utilities and telecom, based on Enterprise Value/EBITDA. Yields are tasty at 5.5%, but many MLPs barely cover their payouts - a contrast to the vast majority of dividend-paying corporations. Stick with MLPs comfortably covering their distributions like EPD and PAA.
- MLP ETFs: AMLP, AMJ, MLPL, YMLP, MLPI, MLPA, MLPN, EMLP, MLPS, MLPG, MLPY, MLPJ, MLPX, AMU, YMLI, ATMP, MLPW, IMLP, ENFR, MLPC
Jun. 27, 2013, 4:51 PMGundlach: Tell us how you really feel, Jeff. "TIPS (TIP) are probably the worst asset class in the U.S. ... I have talked myself blue in the face (previous) trying to get investors not to buy (them)." Given their recent big declines, he doesn't hate them as much as a few weeks ago, but he's still not a buyer. On municipals (MUB), he's a buyer, particularly in closed-end funds who've been doubly whacked thanks to growing discounts to NAV. A sampling of muni CEFs: NIO, NVG, BTT, NPM, NRK, MUC, VCV, NEA. | 3 Comments
Jun. 26, 2013, 3:34 PMWith today's gain, the iShares AMT-Free Muni Bond ETF (MUB +2.1%) has its biggest two-day rally since the financial crisis. but is still off more than 5% YTD. "We are taking advantage of this very opportunistic time," says Cumberland's David Kotok, reiterating a bullish stance he's had for a couple of weeks. "We see no more attractive alternatives." | 3 Comments
Jun. 13, 2013, 9:20 AMMunicipals (MUB) are a buy, writes David Kotok, noting an above-4% yield for very high-grade tax-free muni paper - a taxable equivalent yield above 7%. He suggests fixed-income markets (AGG, BND) have overreacted to the poor communication policies of central banks. "We are now lengthening duration ... If the market wants to give us bargains, our job is to take them." Some closed end muni funds at discounts to NAV: NIO, NVG, BTT, NPM, NRK, MUC, VCV, NEA. | Comment!
Jun. 3, 2013, 4:20 PMAnother Pimco income fund trading at a premium to NAV gets hit - today the Pimco California Municipal Income Fund II (PCK -4.9%). Today's decline still leaves it at a 12% premium to the end of May's NAV at a time when the average muni CEF is trading at discount. Three noteworthy ones: NUV, NPM, MQY. | Comment!
Mar. 28, 2013, 1:21 PMA "perfect storm" of seasonal weakness combined with investors shifting money into stocks has opened up opportunity in the municipal closed-end sector, says Jeff Margolin. Muni CEFs fell 4.5% earlier this month even as NAVs declined just 0.5%, leaving the average CEF trading at a 1.1% discount to NAV vs. what has been a 3.2% premium. | Comment!
NPM vs. ETF Alternatives
It seeks current income exempt from regular Federal income tax. The secondary objective is the enhancement of portfolio value relative to the municipal bond market. It will invest primarily in tax-exempt investment grade quality municipal bonds. Up to 20%
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