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  • My Utility Fund Vs. Reaves Utility Income Fund: Which Offered The Better Return Last Year? [View article]
    GD - As far as I can find there is no way to know what portion of the ordinary income is qualified until the end of the year when funds provide the 1099-DIVs. The 19a that is required to be published with each distribution does not make the distinction.

    Many of the funds, not all, also post the information for the prior year in some form on their website. Like Steven, I was unable to find UTG's info by going through their website, only by doing the Google search I mentioned above. Note "Google" as other search engines will return different results in different orders. Bing also returns the link, but several items down, not at the top as Google does. I'll try providing the link again. We'll see how handles it:

    If the link doesn't work, try the search.

    The document shows that each distribution was all qualified income except for two months when it was all long-term cap gains and two months when it was a mix of qualified and long-term gains.
    Apr 20 05:58 PM | Likes Like |Link to Comment
  • My Utility Fund Vs. Reaves Utility Income Fund: Which Offered The Better Return Last Year? [View article]
    Don't know why the link is broken. I put in the actual link, copied and pasted from my browser's address field, and SeekingAlpha converts it to the link...

    Try doing a Google search for "Reaves Utility Income Fund utg tax info". For me the top result is the correct link.

    I can't point to something that specifically says "after expenses." TR is just price appreciation plus distributions. The price is the price and the distribution listed is what I have received, thus "after expenses." Perhaps you are including the purchase and sales fees that some funds charge which would affect your personal total return.
    Apr 18 05:55 PM | Likes Like |Link to Comment
  • My Utility Fund Vs. Reaves Utility Income Fund: Which Offered The Better Return Last Year? [View article]
    ... and UTG's NAV 10 year total return is 12.87% (12.64% on price) AFTER expenses (from CEFConnect).
    Apr 18 09:37 AM | 1 Like Like |Link to Comment
  • My Utility Fund Vs. Reaves Utility Income Fund: Which Offered The Better Return Last Year? [View article]
    GD, UTG reported tax information for 2013 and all divs were either qualified income or long-term cap gains.‎
    Apr 18 09:22 AM | 1 Like Like |Link to Comment
  • My Utility Fund Vs. Reaves Utility Income Fund: Which Offered The Better Return Last Year? [View article]
    GD, the fees do of course reduce the net asset value as you say, but the reported numbers are net, after the fees have been paid. Fees should not be subtracted from the reported dividend as you did in the earlier comment. The 6% dividend for UTG is what is actually paid.

    With respect to withdrawals from traditional IRAs, they are, as you say, taxed at your marginal tax rate when withdrawn. This effectively negates the lower qualified dividend tax rate of Henry's portfolio. The dividends from Henry's portfolio, if held in a traditional IRA, will be taxed as ordinary income when withdrawn, just as dividends from UTG would be. Given equal investments in Henry's portfolio and UTG in a traditional IRA, UTG will generate 33% more after-tax income regardless of the marginal tax rate.

    I have money invested in both a taxable account and a traditional IRA. I hold stocks that pay qualified dividends in the taxable account and stocks that pay ordinary dividends or interest in the IRA. This allows me to take advantage of the lower qualified dividend tax rate.
    Mar 27 10:17 PM | Likes Like |Link to Comment
  • My Utility Fund Vs. Reaves Utility Income Fund: Which Offered The Better Return Last Year? [View article]
    GD, fund payouts and stock price are net of fees, whether CEFs, mutual funds, or ETFs. It is an error to subtract them from the payout as you did above. The higher return is the result of the current discount (stock price is lower than the NAV) and the fund using 26% leverage (from CEFConnect) which also increases the fees (about .5% of the 1.7% fee).

    Your point about the tax inefficiencies of UTG turning qualified dividends into ordinary dividends is spot on. However, for me, who's marginal rate is 25%, the after tax yield for UTG is 4.5% while Henry's portfolio is 3.9% (4.6% reduced by 15%). Of course, if these are held in a retirement account the tax rate is moot.
    Mar 27 12:35 PM | Likes Like |Link to Comment
  • How One Retiree Is Muddling Through Dividend Investing: Part VIII - A Year Later [View article]
    Martin, I much appreciate your reporting your experience. Thank you.

    On a side note. ETJ is a CEF (closed-end fund), not an ETF, that provides a high-yield, managed distribution and uses a collar strategy to limit down-side risk (and coincidently up-side growth). Collared and covered-call CEFs are defensive in nature and designed to make a total return trade-off, maximizing income with little or no price appreciation. A very different animal from an ETF.

    While covered-call and collar strategies are supposed to be defensive in nature, they appear to have been badly hit by the great recession. Their high managed distributions prevented their full NAV recovery. Ideally the NAV should increase slightly over time, not fall. If it does fall, the distribution needs to be decreased, a step Eaton Vance and others, belatedly took last year.

    For my retirement plan I decided that I wanted to maximize current income while I am healthy and mobil and can make the most of it, consistent with growing income and portfolio value at or slightly faster than inflation (my target, 3.5% CAGR).

    When I retired a little over two years ago I set a withdrawal rate target that would replace my pre-retirement net income, plus enough to cover medical insurance and taxes. Like you, I needed a 5% yield, but chose to use a few high-yield (over 9%) stocks (two CEFs, an MREIT, and a BCD - currently 18% of my portfolio), to create 33% excess income (now 50%) above my targeted withdrawal. I expect the distributions of these stocks will vary and their prices to be flat or slightly appreciate. Thats okay. I currently have 22 approximately equal-weighted positions, over half of which are CCC stocks - thank you David Fish. The CCC stocks provide sufficient dividend and price appreciation to help meet the portfolio growth goals. See my profile for actual holdings.

    The excess income provides a cushion against dividend cuts, can be reinvested if necessary to increase dividend income if it doesn't increase by the targeted 3.5% a year, or taken as an annual bonus if not needed for either the preceding. Fortunately I have been able to take the annual bonus each year so far, currently equal to about 50% of my targeted withdrawal. I do not worry if the portfolio value falls below target for year or two. The market "tides" rise and fall. I'm income focused.

    The 50% income cushion, plus a cash cushion equal to 18 months of withdrawals, gives me more than enough cushion to weather another Great Recession without needing to reduce our life style (though we would cut back some out of prudence). I SWAN.
    Mar 22 11:51 PM | 5 Likes Like |Link to Comment
  • What's Your (Dividend Growth) Number?: Part 3 [View article]
    A couple of additional details: The new KMR shares are distributed proportionally to your existing lots of KMR. If the lot is long term, the new shares are immediately considered long term as well. The cost basis of the shares in the lot is reduced by the $0 cost basis of the new shares, i.e. same lot cost / more shares.
    Mar 13 11:16 AM | 2 Likes Like |Link to Comment
  • Will These Stocks Fill Up Your Tank? [View article]
    Yes. Drilling down to the Dividend Payments page, the inconsistent ordering of years (newest on top) and quarters within years (oldest on top) leads directly to the erroneous dividend increase you reported in both the article and your comment above.

    The dividend history listed by PWE only goes back a couple of years. Looking at Yahoo, we see another big drop from $0.43 in 2010 (Jun-Aug) and $0.56 in 2009Q1.
    Feb 23 02:21 PM | Likes Like |Link to Comment
  • Will These Stocks Fill Up Your Tank? [View article]
    I see no restoration of the dividend. The last two quarters paid $0.14 and $0.13. Your calculation appears to be backward given the dates you state.

    Yahoo dividend data shows a long-term downward trend since at least 2006.
    Feb 23 12:03 PM | Likes Like |Link to Comment
  • Will These Stocks Fill Up Your Tank? [View article]
    PWE's div growth growth rate is -48% last year and has been dropping for years. I don't see how either ERF or PWE could be recommended even DRIP'ed.
    Feb 21 12:00 AM | 1 Like Like |Link to Comment
  • Turn Your Roth IRA Into Your Own Oil Well [View article]
    db, prior to retirement the only thing that really matters is how you split your investment dollars between taxable, Roth, and traditional retirement accounts and the total returns in those accounts. If you are in a higher tax bracket and/or an employer adds matching funds, the traditional account might make more sense. If you can afford the cost (taxes) now or are concerned about MRDs after the age of 70 1/2, maybe Roth gets the focus.

    My comments are primarily about how the funds are invested after retirement, when you start withdrawing dividends to live on. I will want to minimize taxes. Let's say I have $300,000 invested in high income, fully taxable securities, split 50/50 between Roth and traditional accounts. Holding the higher income securities in the Roth account means that a higher percentage of the total withdrawal will come from the Roth, thus reducing my overall taxes. And reducing taxes means that either I can withdraw less or increase the money in my pocket.

    In the same vein, if I hold stocks in a taxable account, they should be those that pay qualified dividends rather than those that are fully taxable. The whole point here is that minimizing the taxes paid on total withdrawals will reduce the amount the needs to actually be withdrawn, leaving more dividends to reinvest.
    Dec 21 08:33 AM | 2 Likes Like |Link to Comment
  • Turn Your Roth IRA Into Your Own Oil Well [View article]
    I would not put stocks that pay qualified dividends into a Roth account if I annually invest more than allowed by Roth account limits. I try to distribute my various investments across accounts that best match a security's tax and likely trading characteristics in order to maximize income by minimizing capital gains and taxes on distributions withdrawn after retirement.

    * Taxable accounts: Core (buy and hold) C-corp companies e.g. XOM, KO, KMB, and foreign taxed dividends - minimal trading; tax advantaged qualified dividends; foreign tax credits
    * Traditional IRA/401k: Lower income, fully taxable income securities e.g. REITs and bonds - all withdrawals are fully taxable so avoid securities that are tax advantaged unless non-core; no taxes on trades
    * Roth IRA/401k: Higher income, fully taxable income securities e.g. BCDs - no taxes on withdrawals or trades

    Of course your actual portfolio diversification will likely not match the amounts exactly that can be contributed to each type of account, but I think it is worth trying to match as best as possible.
    Dec 19 11:26 PM | 2 Likes Like |Link to Comment
  • Starting A Retirement Portfolio For 2014? Start With These 'Surprise' Stocks [View article]
    Buyandhold, when will you have enough? Like you, I scrimped a bit while I was young. I fully funded my 401k rather than taking expensive vacations. While we bought new cars, we drove them for 15 to 20 years until they died.

    At retirement the dividend income plus social security exceeded my pre-retirement paycheck (net plus taxes and health insurance) by 25%. Two years later, after reinvesting the excess income, the dividend income exceeded the paycheck by 33% and still growing. Why should I keep reinvesting the excess income, growing future income even more, while continuing living on my simple paycheck?

    Now I target portfolio, dividend income, and "paycheck" (withdrawals to replace my working paycheck) to grow just 3.5% a year (my long term inflation factor). I withdraw just enough during the year to cover my paycheck. At the end of the year, if my targets haven't been met, the excess income is reinvested. But if the targets have been met, I take the excess income as an annual bonus - fun money for travel, education funds for the grandkids, home remodeling, a nicer car.

    Figure I might as well enjoy the extra income, as long as targets are met and reserves maintained, while I'm still healthy. Being a spendthrift at this point in life will only enrich my estate.
    Dec 17 02:20 PM | 6 Likes Like |Link to Comment
  • Retiree: What Role Should High Yield Play In A Distribution Stage Portfolio? [View article]
    Bob, my experience is generally similar to yours, but I haven't opted out of holding a few high-yielders. I manage my portfolio as a fixed number (21) of equal-weight positions. Each position is allocated to a stock of a certain type: utility, consumer staple, financial, eREIT, etc. When I trade, I rotate stocks within a position, usually of the same type.

    Three positions are allocated to yield hogs, stocks with yields above 9%. As you have experienced, the stocks in these positions haven't performed as well as the other positions. The three year, total return CAGR for these three positions are the lowest of the 21 positions. However, while one is in the red - the mREIT - the other two, the BDC and buy/write equity CEF, are performing well enough. The CEF has the 7th best total return this year.

    The expectations for the yield hogs are different than the core and growth positions: varying yield (as long as the yield-on-cost remains above 9%), volatile price, and little, if any, capital appreciation. It is a long-term trade of cap gains for income.

    Given the expectations of rising interest rates, I may retarget the mREIT position to BDC or CEF.

    I'm in retirement. The target CAGRs for portfolio and income growth are modest, just enough to cover long-term inflation (3.5%) - actual 3 year CAGRs are 16% and 13% respectively, well above target. I'm very willing to trade cap gains and some portfolio volatility for income now as long as the overall portfolio value and income growth meet their long-term targets.

    A portfolio yield of 4.6% is needed to cover my "paycheck withdrawal." The yield hogs and a few REITS and 1099-type MLPs in addition to more traditional DGR stocks provide a portfolio yield of 6.8% and an income cushion of 50% (target 33%). The extra income serves as a cushion in bad times, an annual bonus in good.

    Each stock in a portfolio can serve the same function or various stocks can serve different functions. Each has to be held to standards appropriate to it function. Overall I think a few yield hogs deserve a position within a retires' portfolio.
    Dec 1 12:13 PM | 3 Likes Like |Link to Comment