a lot longer! The feds have forecast that higher interest rates will be with us through 2026, the Fed said in a statement. The hope was that rates would drop someday in 2024, which caught many investors by surprise.
I'm not convinced the Fed can keep interest rates high until the end of 2026 without breaking anything in the economy, as I mentioned last week.
Despite inflation, it's still important to focus on income-producing investments for your portfolio, as inflation is still above 4.0%.
As always, one of my favorite methods for generating income is through closed-end funds.
CEFs are a type of mutual fund that issue a set amount of shares through a single initial public offering to raise capital for its initial investments. The shares can then be bought and sold on a stock exchange, but no new shares will be created and no new money will flow into the fund.
When you can buy shares of a CEF at a discount to the NAV, this means that you can purchase shares of a CEF at an actual discount to the NAV.
With the ability to buy shares of CEFs for a discount to their NAV, CEFs can be a valuable option for investors looking for a professionally managed income-producing portfolio.
This week, I'm watching the Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund, a closed-end fund that invests in a diversified portfolio of common stocks and writes call options on one or more U.S. and foreign indices on a substantial portion of its common stock portfolio to generate current earnings from the option premiums.
The fund's portfolio comprises 287 equity holdings with household names such as Apple Inc., Microsoft Corporation, Amazon.com Inc., LVMH Mot Hennessy Louis Vuitton SE, and Nestlé SA, rounding out the top five positions with weightings of 6.41%, 5.61%, 3.09%, 2.29% and 2.20%.
As of Q2 2023, 96% of the stock portfolio has call options written, with an average of 16 days until expiration and strike prices that are, on average, 0.30% out-of-the-money.
BCAT is trading at a significant discount to its NAV at the current price, but it also provides a healthy 9.09% yield. This is more than double the rate of inflation and nearly double what you can get in most high-yielding money market accounts.
Be careful out there and keep an eye out for more opportunities later in the week.
The post This stocks are Yielding over double the inflation rate right now appeared on total wealth.
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