ABT - THQ: Collecting A High Yield From Increased Medical Spending
2024-04-20 12:03:00 ET
Summary
- abrdn Healthcare Opportunities Fund (THQ) offers a high dividend yield of 11.3% and exposure to diverse subsectors of the healthcare industry.
- The fund outperforms its peers, abrdn World Healthcare Fund (THW) and BlackRock's Health Sciences Trust (BME), in total return.
- THQ trades at an attractive discount to NAV, making it a favorable entry point for investors.
- The distribution has never been cut. Although, I notice that total investment operations have no been able to fully cover the distribution as of last year.
Overview
The healthcare sector ( XLV ) has lagged behind the S&P500 ( SPY ) for the past year and I believe this opens the door to an opportunity to capitalize on this difference. The factors contributing to the sector's underperformance can be a wide range of things including the end of Covid, patent expiries, higher interest rates leading to increased debt burdens, and tightening consumer spend just to name a few. I have always felt that it's much easier to hold positions through downturns and shaky market cycles when you are receiving high distributions from your position. Dividend income makes the price and volatility of the market matter a lot less....
THQ: Collecting A High Yield From Increased Medical Spending