GDV.PR.K: A Rates Play, Reiterate 'Buy' Rating

Summary

• The common shares of the Gabelli Dividend & Income Trust have been downgraded to 'Hold' from 'Buy'.
• The preferred shares of GDV, specifically Series K, still offer a good buying opportunity due to the recent increase in rates.
• Series K has the longest duration and has been heavily affected by the increase in rates, but the current bout of higher yields is expected to be over.
• The Series K benefits from asset coverage requirements as demanded by the 1940 Act, which ensures credit risk is minimal.
• The shares are trading with a discount to liquidation preference of over -25%, indicating the market is now pricing the Series K as having a very high duration.

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Thesis

We have recently downgraded the common shares of the Gabelli Dividend & Income Trust (GDV) CEF to 'Hold' from 'Buy', after a very compelling total return for the name. In the article, we mentioned the preferred shares for the

Analyst’s Disclosure:I/we have a beneficial long position in the shares of GDV.PR.K either through stock ownership, options, or other derivatives. 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.