Updates: High Income NOW Portfolio

The High Income NOW portfolio has been updated for September. Here is a link to the portfolio, and here are the highlights:

  • BlackRock Credit Allocation (BTZ): BTZ remains the top holding, although the weight has been reduced from 7.5% to 6.0%. This fund offers an impressive combination of high income (it yields 10.0% (paid monthly) and an attractively discounted price (-8.2%). It has a reasonably low expense ratio and is managed by a world class team (BlackRock). The duration is 6.2 years, which is a bit longer than most funds of this type, although attractive considering long-term rates have been on the rise.

  • PIMCO Dynamic Income Fund (PDI): We like this fund a lot, but reduced its weight to 3.0% (previously 5.0%) as the premium has grown to 6.9% (still not bad for a PIMCO fund), and as the very large yield (+14.6%) will be increasingly hard to maintain without dipping into the somewhat dreaded “return of capital category.”

  • Cohen & Steers Infrastructure (UTF): We added shares of this popular high-yielder as the price is increasingly attractive, and so are the underlying holdings, as we wrote in our recent Top 10 Big Yields report.

  • W.P. Carey (WPC): We added a new position in this popular REIT as the price is getting to low compared to the value, as we wrote in our recent WPC report.

  • BlackRock High Yield Fund (HYT): We sold this position altogether on the basic thesis the credit spreads are really low by historical standards right now, and that means the price of HYT is really high by historical standards. It may be worth re-entering this position the next time the market gets nervous and credit spreads blow back out.

Be sure to also review our latest Top 10 Big Yields report for more information on the names on this list.