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SCD: Unique Blend Of Tech And Energy


  • SCD, the LMP Capital and Income Fund, is truly unique in its sector allocation. The top two sectors for the fund are tech and MLPs.
  • This fund has a diversified portfolio beyond just sectors and even invests in preferred stock; including some small exposure to bonds as well.
  • They cut their distribution at the end of last year, but it still maintains an attractive 8%+ yield.
  • This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Learn More »

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Written by Nick Ackerman, co-produced by Stanford Chemist

If you are looking for a unique fund that could possibly play both the value and growth area of the market LMP Capital and

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This article was written by

Nick Ackerman profile picture

Nick Ackerman is a former financial advisor using his experience to provide coverage on closed-end funds and exchange-traded funds. Nick has previously held Series 7 and Series 66 licenses and has been investing personally for over 14 years.

He contributes to the investing group CEF/ETF Income Laboratory along with leader Stanford Chemist, and Juan de la Hoz and Dividend Seeker. They help members benefit from income and arbitrage strategies in CEFs and ETFs by providing expert-level research. The service includes: managed portfolios targeting safe 8%+ yields, actionable income and arbitrage recommendations, in-depth analysis of CEFs and ETFs, and a friendly community of over a thousand members looking for the best income ideas. These are geared towards both active and passive investors. The vast majority of their holdings are also monthly-payers, which is great for faster compounding as well as smoothing income streams. Learn More.

Analyst’s Disclosure: I am/we are long MSFT, EPD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This article was originally published to members of the CEF/ETF Income Laboratory on March 22nd, 2021.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (17)

looks good i never held it going to stick with ncz(much better then similar ncv) this scd now on my watch list thanks
" It may invest in both energy and non-energy master limited partnerships (MLPs), so long as no more than 25% of the Fund's total assets are invested in MLPs that are treated as qualified publicly traded partnerships"

This could be a reason why there is ROC which is fine over my way?
Nick Ackerman profile picture
@AlieGee yes, that is true. That is leading to some of the ROC. The real interesting thing is that while I was digging through their annual report, they didn't provide the portion of ROC that they were receiving. Thus, why I left out a specific figure. At least, it wasn't in the usual locations.
@Nick Ackerman Legg Mason 2020 Closed-End Fund Distribution Summary ,www.leggmason.com/...
SCD looks to be about 75% ROC , tables also have RVT ,another fund I own . Think the dividend reduction of 16% last November will bode well for funds NAV health , was overdue as fund was over distributing , another interesting " boutique " fund , like its holdings & diversity of income producing securities
Nick Ackerman profile picture
@hingroyield thank you for sharing that link! However, we were talking about the MLPs in the fund that pay ROC themselves - that gets passed onto shareholders of SCD as ROC. In this case, it isn't all destructive ROC due to that. That being said, the fund didn't have a line in their annual report, that most other funds provide for how much was classified as ROC from their underlying holdings. At least not one that I could find, though I'd be happy to hear if someone else found it.
It is an interesting CEF, on my watch list for now but edging higher up in my potential 'to buy' list.
Nick Ackerman profile picture
@clrodrick thank you for reading and sharing your thoughts!
I was JUST looking at this fund again yesterday as a possible add. Great minds and all...haha.

I knew it was allocated to several different security types, in addition to “income equities”....but didn’t know that it was tech heavy. I’ve been trying to play the value-growth tug of war in another portfolio some (though the last several days have seen about everything go up)...thanks for the article! :)
Nick Ackerman profile picture
@Graust glad you enjoyed the article! And glad to be able to provide it at such great timing hah!
Uh when did they increase the dividend again?

From the top bullet point: “They cut their distribution at the end of last year, but it still maintains an attractive 8%+ yield.”

The dividend growth chart was for an individual holding ($AVGO specifically).

EDIT: I see you were replying to @smurf. Idk what he is talking about, but....well, he is blue, after all. Haha
Nick Ackerman profile picture
@lesmcfalls I believe they might have been referring to the increases that it was having since the initial (and big) cut in 2008. Though yes, it did cut last year, presumably due to the energy exposure in the portfolio.
smurf profile picture
Me like.

Modest leverage and fees, and looks like they may be coming to be able to sustain the dividend without ROC. A dividend, by the way that has increased nicely.
Nick Ackerman profile picture
@smurf thank you for sharing your thoughts! Unfortunately, they did trim last year but had increased it a few times from the lows in 2008/09.
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