Tekla Healthcare Investors: Understanding The Mechanics Of Its 8.5% Yield

Jan. 16, 2022 7:34 AM ETabrdn Healthcare Investors (HQH), , , , 108 Comments

Summary

  • Tekla Healthcare Investors is a closed end fund (CEF) that currently sports an 8.5% current yield.
  • If you understand the mechanics of this CEF, you quickly realize the source of the quarterly dividends is capital appreciation or up to 2% of the net asset value.
  • Over the past five years (fiscal year ending September 30, 2021) the total return of HQH has dramatically lagged the S&P 500 and a large Healthcare ETF, like iShares IYH.
  • Looking for a helping hand in the market? Members of Second Wind Capital get exclusive ideas and guidance to navigate any climate. Learn More »

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Over the weekend, I read with great interest an article purportedly tailor made for retirees searching for yield. The article suggested that Tekla Healthcare Investors (NYSE:HQH), with its roughly 8.5% current yield, was a fantastic

Second Wind Capital is a value oriented investment service with a strong recent track record of exceptional outperformance. The focus is mostly small cap value, but opportunistic and open minded towards special situations. In 2020, the total return of the portfolio was +93%. In 2021, the total return of the portfolio was +55%. 

This article was written by

Courage & Conviction has been investing for over twenty years and has spent five years working as a buy-side analyst within a $45 billion investment-grade bond department, 3.5 years as an energy analyst, in addition to various other corporate finance roles. He has been a full time investor and author since 2020.

He leads the investing group Second Wind Capital, providing in-depth analysis on under-the-radar smallcap value ideas. He shares his real-money portfolio and does research based on fundamentals, synthesizing industry ecosystems and regularly interviewing management teams. He teaches community members to embrace volatility and exercise patience to drive alpha creation.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. 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.

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