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Closed End Funds For Steady Income Flow

Reviewing: Black Rock Closed End Fund  |  Rating:
alexsandralyn By alexsandralyn on
Badge: Advisor | Level: 17 | Finances Expertise:

My savings account is earning less than 1% right now, so I decided to search for a better yield on the $1, 000 that I won't be needing for my house repairs for another 10 years. Closed end funds are mutual funds with a fixed number of shares that trade like stocks on the stock market, and their prices fluctuate above and below their NAV (net asset value) according to market demand. The NAV of a mutual fund is determined by the current market value of all of its holdings if they were all sold today, and can fluctuate greatly as the stock market of 2009 has already done.

I selected BlackRock Enhanced Capital and Income Fund, Inc (CII) as the place to park my $1, 000 for awhile for several different reasons:

1) BlackRock is a well-known and highly respected financial investment company

2) BlackRock Enhanced Capital and Income Fund, Inc (CII) was selling at a 4% discount to NAV on the day I bought it, a small savings on the current market value of its holdings.

3) BlackRock Enhanced Capital and Income Fund, Inc (CII) has delivered a steady $0.485 quarterly dividend per share since June, 2007, equating to approximately 13% annual dividend yield on my $1, 000 investment.

4) BlackRock Enhanced Capital and Income Fund, Inc (CII) invests in common stocks, and also writes call options to generate income. The options market is something I've wanted to get into because it can be so lucrative, but I happen to stink at trading options, and I'm happy to find a professional portfolio manager who understands the options market much better than I do and can make a profit there.

If you are interested in researching closed end funds for your own investment portfolio, I highly recommend a visit to CEFConnect.com. CEFConnect.com has a closed end fund screener that will search out high-yielding closed end funds that are trading at a discount right now, and you can choose the options that will best fit with the needs of your portfolio.