This article was first published on November 26th, 2019.
Earlier this year I covered Gabelli Dividend & Income Trust (NYSE:GDV) in a piece titled "The 'Steady' Gabelli Closed-End Fund." This was on January 16, 2019. They then announced a rights offering on September 23rd of this year, which many CEF investors know that this is not what a 'steady' CEF does, especially a dilutive one. I announced in a blog post that I had ended up selling the shares shortly after the announcement. The offering has now been completed and I felt like brushing back up on the fund. Unfortunately, I am hesitant at this time to jump back in. This is primarily because the broader market is hitting record high after record high. GDV is a pretty standard equity fund that does not offer much in the way of downside protection. This, of course, fits right in with a long-term investing perspective and can be a tempting fit with most investors' portfolios. Of course, the 6.35% distribution rate is a great touch that you can't get in something like the SPDR S&P 500 ETF (SPY).
Timing the market is not something that I generally do, however, I am hesitant at all-time highs in the broader market. That's because CEFs can sell off sharply during panics due to the discount/premium from their NAVs. Of course, we can continue hitting new all-time highs for a considerable amount of time. Perhaps I am being a bit too cautious but generally, I would expect a better entry price in the future. This is especially true as we have been experiencing quite a bit of volatility in the overall market as measured by SPY for the last couple of years. This has been fueled primarily by the ongoing trade concerns between the U.S. and China.
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