SCD - SCD: A Very Diversified CEF That Is Fully Covering Its 9.44% Yield

2024-03-06 10:48:28 ET

Summary

• LMP Capital and Income Fund Inc is a unique closed-end fund that invests in a combination of common stocks, fixed-income securities, and specialized business structures.
• The fund has a current yield of 9.44%, significantly higher than other equity closed-end funds on the market.
• The fund's performance has been reasonable, with a 3.61% gain since December 2023, but it has underperformed the S&P 500 Index.
• The fund appears to be fully covering its distribution and is at little risk of a near-term cut.
• The fund is trading at an enormous discount on net asset value right now, and its net asset value is outperforming the shares YTD.

The LMP Capital and Income Fund Inc ( SCD ) is a closed-end fund, or CEF, that investors can employ in order to earn a high level of current income from the assets in their portfolios. This fund is one of the more unique ones in the market, as it invests in a combination of common stocks, fixed-income securities, and specialized business structures such as master limited partnerships and real estate investment trusts. This makes this one of the few closed-end funds that invest in master limited partnerships without being an energy-sector-specific fund.

Overall, this combination of asset classes can be good to see, as it allows the fund to take advantage of opportunities for income that many other closed-end funds are unable to exploit. After all, master limited partnerships frequently have much higher yields than corporations or even most fixed-income securities. As such, they can provide the fund with more income than similar companies operating with different business structures....

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