PIMCO’s big-yield bond funds are often an income-investor favorite because of their large 9% to 13% yields. Some investors have been traumatized in recent years as prices fell hard (when the fed rapidly hiked interest rates) while other investors haven’t cared as long as the big monthly income payments kept rolling in. This article provides an update on PIMCO bond funds now, and my opinion on which may (or may not) be worth considering for investment, mainly in light of how PIMCO is sourcing the distribution payments to investors.
Market Overheating? High-Income Strategies Worth Considering
The market continues to climb a wall of worry, and some investors believe it’s getting a bit ahead of itself. For example, the S&P 500 is up +6.9% this year and up +27.4% over the last 12 months, but we keep hearing stories about a sputtering economy. If you are concerned the market is ahead of itself, and we may be due for a healthy pullback, here are 3 high-income investment opportunities for you to consider.
PIMCO Bond CEFs: A Big Price Rally is Coming
With real interest rates finally turning positive (inflation has slowed) and fed rate hikes arguably over, there could be incentive for investors to move out of equities (i.e. putting selling pressure on stocks) and into fixed income. One area that may benefit significantly is bond Closed-End Funds. In particular, many bond CEFs currently trade at unusually low market prices as compared to their net asset values (as evidenced by the many very negative z-scores across the space).
PDI vs. PDO: Building A Monster Big-Yield Portfolio
There are as many prudent dividend strategies as there are dividend investors. However, in this report, we review three specific income-focused portfolio strategies, including monster big yields, dividend growth investing, and build-your-own income. Next, we dive into the details on two monster big-yield closed-end funds (“CEFs”) from PIMCO (PDI and PDO). After comparing these two funds in detail (including the 7 things we always consider when evaluating CEFs) we conclude with our strong opinion on which one is better, and how they fit (or do not fit) into our prudently diversified High Income NOW portfolio.
Bond CEFs: Prices, Premiums and Interest Rates
A quick note to share some updated data and commentary on a handful of popular big-yield bond CEFs from PIMCO and BlackRock. This note may be of particular interest to those following our High Income NOW portfolio. For starters, here is a look at the latest movement in premiums and discounts (versus NAV).
PIMCO CEFs: Special Year-End Distributions
To the delight of many income investors, PIMCO announced Monday that a handful of its big-yield bond funds will be offering special year-end distributions. Here is the press release from PIMCO. And you can read our analysis on these PIMCO funds here here and here.