GDL - TY: Massive Discount But Variable Distribution Might Not Appeal To Everyone

2024-06-12 10:55:10 ET

Summary

• Tri-Continental Corporation offers exposure to domestic equity securities with a 3.82% yield, lower than peers but higher than American common equity indices.
• The TY closed-end fund's shares have gained 14.81% over the past five years, underperforming the S&P 500 but outperforming investment-grade bonds.
• The fund's portfolio primarily consists of common stocks, with an emphasis on high-yielding dividend stocks, and trades at a 12.06% discount to net asset value.
• The fund appears to be underweight the Magnificent 7 but overweight high-yielding dividend stocks, which fits well with its goal of having a higher yield than the S&P 500.
• The fund's distribution tends to vary, so it may not be appealing to those who need a high level of current income regularly.

The Tri-Continental Corporation ( TY ) is a closed-end fund, or CEF, that investors can purchase to gain exposure to equity securities from issuers around the world. As is the case with most closed-end funds, the Tri-Continental Corporation boasts a reasonably high yield, although at 3.82%, it is far from being the highest available in this asset class:

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