PAXS - PDI: PIMCO Vs. BlackRock 10 Big-Yield CEFs Compared

2024-07-21 18:00:00 ET

Summary

• PIMCO's bond CEF, PDI, offers one of the biggest (and longest running) monthly distribution payments to investors (currently 14.0%, paid monthly).
• The fund also has favorable characteristics versus other bond CEFs from PIMCO and BlackRock (we share comparative data on 10 of them in this report).
• After reviewing PDI in detail (including holdings, leverage, premium, distribution sources, risks and more), we conclude with our strong opinion on investing.

If you are an income-focused investor, you've likely considered PIMCO's popular big-yield bond funds (often yielding in excess of 10%, paid monthly). You may also have considered BlackRock funds (although many perceive them as second rate to PIMCO). In this report, we compare high-level data on 10 big-yield bond funds (from PIMCO and BlackRock), and then dive deeper into PIMCO's 14% yielding Dynamic Income Fund ( PDI ), including a discussion of its risks (such as leverage, interest rates, insufficient distribution coverage, confounding interest rate swaps and the potential for delayed recognition of "Return of Capital" that was previously taxed as ordinary income). We conclude with our strong opinion on investing.

10 Big-Yield Bond Funds

Just to get some data in front of you right from the start, here is a look at recent data for 10 big-yield bond funds from PIMCO and BlackRock (all of them pay monthly). And as you can see, the yields are impressive....

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