SPY - ETY: 9% Income Yield Paid Monthly But Is It A Good Investment?
2024-04-07 09:00:00 ET
Summary
- Eaton Vance Tax-Managed Diversified Equity Income Fund is a closed-end fund that mainly invests in the equities of U.S. listed companies.
- ETY has a reasonable long-term record of performance even though it tends to underperform the S&P 500.
- We believe it is an attractive fund for income investors with a nearly 9% yield paid on a monthly basis. However, there are some better choices with lower yields.
Introduction:
Eaton Vance Tax-Managed Diversified Equity Income Fund ( ETY ) is a closed-end fund that was incepted in Nov. 2006. The fund's primary objective is to provide a high level of tax-advantaged income, along with capital appreciation. The fund invests in domestic equity stocks with an emphasis on growth stocks and uses zero leverage. Recently, the fund increased its distribution and currently pays a very attractive yield of 9.03% (paid on a monthly basis). As the name indicates, the fund tries to pay the distributions in an efficient tax manner as much as possible. To make distributions tax efficient, it tries to provide qualified dividends as much as possible. Many times, it provides distributions as ROC (return of capital). ROC reduces the shareholder's basis in the investment, essentially deferring the tax to a future date (when the investment is sold). So, in that sense, it may be better to hold this fund in a taxable account....
ETY: 9% Income Yield, Paid Monthly, But Is It A Good Investment?