ALPINE DYNAMIC DIVIDEND FUND

[hogwild]

Anyone invested in this fund? Symbol is ADVDX. This looks like a good alternative to bond funds. Plus you get the dividend tax rate instead of the interest tax rate. Current yield is 13.7%.

 

[saluki9]

Why would a mid cap value fund with a Beta of 1.04 and an R-Squared of over 70% be a substitute for a bond fund?

 

[ziggy29]

I can't imagine a dividend yield of 13% is sustainable. Either there was a very large one-time recent dividend distribution or else the stocks owned by the fund are very beaten down and likely to not be able to maintain their dividends.

Beyond that I'm not familiar with the fund so I can't comment on specifics. I just think a 13% yield is either a short-term anomaly or a red flag that there are some very weak businesses being held.

 

[hogwild]

I can't imagine a dividend yield of 13% is sustainable. Either there was a very large one-time recent dividend distribution or else the stocks owned by the fund are very beaten down and likely to not be able to maintain their dividends.

Beyond that I'm not familiar with the fund so I can't comment on specifics. I just think a 13% yield is either a short-term anomaly or a red flag that there are some very weak businesses being held.

It pays a monthly dividend. The total dividends, per share, in 2006 was $1.574 and in 2005 was $1.51. The 2006 yr-end closing price was $12.80 and for 2005 was $10.44.

 

[ziggy29]

It pays a monthly dividend. The total dividends, per share, in 2006 was $1.574 and in 2005 was $1.51. The 2006 yr-end closing price was $12.80 and for 2005 was $10.44.

Very interesting. I wonder how recession-proof these dividends are. I have my doubts. I suspect this fund may move with junk bonds, but I could be wrong.

 

[CybrMike]

I have owned this fund for a couple of years. It invests in stocks for at least the 60 day holding period so that it gets the 15% dividend tax treatment. The fund has a high turnover and high expense ratio but has done well for the last couple of years and has had a yield of 12 - 13 % for the same period.

Here is a link to morninstar to check out top 5 holdings (GE is one of them).

http://quicktake.morningstar.com/FundNet/Snapshot.aspx?Country=USA&pgid=hetopquote&Symbol=advdx

 

[FinanceDude]

I have owned this fund for a couple of years. It invests in stocks for at least the 60 day holding period so that it gets the 15% dividend tax treatment. The fund has a high turnover and high expense ratio but has done well for the last couple of years and has had a yield of 12 - 13 % for the same period.

Here is a link to morninstar to check out top 5 holdings (GE is one of them).

http://quicktake.morningstar.com/FundNet/Snapshot.aspx?Country=USA&pgid=hetopquote&Symbol=advdx

GE and Wyeth pharmaceuticals..........not your typical "weak businesses"..............

 

[ziggy29]

I have owned this fund for a couple of years. It invests in stocks for at least the 60 day holding period so that it gets the 15% dividend tax treatment. The fund has a high turnover and high expense ratio but has done well for the last couple of years and has had a yield of 12 - 13 % for the same period.

Ah. It's a fund that darts in and out of stocks that "buys dividends."

I knew there had to be something to it. Seems like that would cause the NAV to plummet in a down market.

 

[FinanceDude]

Ah. It's a fund that darts in and out of stocks that "buys dividends."

I knew there had to be something to it. Seems like that would cause the NAV to plummet in a down market.

Doesn't the NAV of mutual funds in equity funds in general "plummet" in a down market??

 

[ziggy29]

Doesn't the NAV of mutual funds in equity funds in general "plummet" in a down market??

Well, yeah, but in an up market the NAV increase can make up for the drop caused by a dividend distribution.

In a market that's down 10%, something paying a 12% dividend might see a 22% decline in NAV or close to it. Ouch! I suppose it would make for some nice tax loss selling, though, since the taxed dividends are added to your cost basis.

Come to think of it, this might be a good fund for people looking not only to get gains capped at 15%, but also to create losses to offset capital gains.

 

[FinanceDude]

Well, yeah, but in an up market the NAV increase can make up for the drop caused by a dividend distribution.

In a market that's down 10%, something paying a 12% dividend might see a 22% decline in NAV or close to it. Ouch! I suppose it would make for some nice tax loss selling, though, since the taxed dividends are added to your cost basis.

Come to think of it, this might be a good fund for people looking not only to get gains capped at 15%, but also to create losses to offset capital gains.

Hard to find a bond paying 13%.............

 

[saluki9]

Oh, I can find you plenty of bonds paying 13%, can't promise you your principal back though

 

[d]

"dynamic" suggests both up and down.

 

[hogwild]

Doesn't the NAV of mutual funds in equity funds in general "plummet" in a down market??

The fund does have a short history. I think it started up in Oct of 2003. However, the price fell about 2.9% on Feb 26 this year - the day of the 400+ point drop in the Dow. Then, on Feb 27, it paid a 7 cent dividend.

If you look at the price history, it has been pretty consisently on the rise. I certainly agree that the current yield would be difficult to maintain, but, to me, it is worth monitoring for a time to see if it is something I might want to put 5-10% in after I retire. Don't need the income now.