ENB:CC - AOD: A Decent 8%-Yielding Pick As Long As You Have International Exposure
2024-07-29 04:48:10 ET
Summary
- The abrdn Total Dynamic Dividend Fund offers income-focused investors exposure to common equity securities for potential inflation protection.
- The fund's 8.15% yield is competitive, and its performance has been reasonable, outperforming some benchmarks on a total return basis.
- The fund claims to be focused on dividend income, but many of its positions do not have much of a yield.
- The fund has substantial exposure to the United States, so it does not offer as much international diversification as is desired.
- The valuation is reasonably attractive, so it might be worth considering for purchase as long as proper international exposure is obtained elsewhere.
The abrdn Total Dynamic Dividend Fund ( AOD ) is an interesting closed-end fund that can assist income-focused investors in achieving their goals. Perhaps the most interesting thing about this fund is that it invests its assets into common equity securities as opposed to fixed-income assets like most income-focused funds. I explained the advantages of this approach in a few previous articles, such as this one . From that article:
AOD: A Decent 8%-Yielding Pick As Long As You Have International ExposureAs I have explained in various previous articles, equities tend to be better at protecting investors against inflation than fixed-income securities. While the inflation fears have subsided a bit since the most recent report claims that prices were flat in June, the core producer price index actually accelerated with the June year-over-year increase coming in at the highest level that it has seen in a year.
…
Thus, we are not out of the woods yet with respect to inflation, and it is still very important that investors retain their exposure to assets that will hold their purchasing power on an inflation-adjusted basis. This means that we need to be invested in equities, gold, and similar things.