Normally, investing in securities with above-average dividend
yields can be risky... If a stock is
that sounds too good to be true, then it probably is.
Sometimes a high yield is the result of a falling share price --
signaling problems in a company's performance. It can also signal
cut could be on its way.
And in general, higher yields represent higher risks.
That's one reason why I prefer funds when I'm looking to tap
into a high yield. Because funds hold a large number of high-yield
investments, they can minimize company, industry or
When it comes to high-yielding funds, one of my favorites hasn't
lowered its dividend in the past eight years -- not even during the
financial crisis and subsequent
. All told, this fund has returned an average of 12% a year since
it started trading in 1993.
Better yet, for you income lovers out there, this fund also pays
The investment I'm referring to is
AllianceBerstein Global High Income Fund (NYSE:
high-yield bond fund
that invests in a wide range of debt securities from all around the
About 20% of the fund's portfolio holdings are related to
, while the balance is held in corporate debt and asset-backed
With 850 total holdings, it might be hard to find a portfolio as
diversified as AWF's. Roughly 65% of the holdings are from the
United States, although the holdings hail from 51 different
countries from all over the world.
When it comes to its corporate holdings, AWF seeks to avoid
loading up on one sector in particular. Sectors represented by
AWF's holdings include basic materials, telecommunications, media,
energy, transportation, consumer retail, restaurants and
aren't blue chips like those offered by domestic firms like
, but many are still household names. For instance, it holds debt
from the department store Neiman Marcus, the car rental company
and debt issued by the casino company,
Caesars Entertainment (NYSE:
The fund is leveraged, but only by about 8.5% -- which is not as
high as many of its peers. This serves to increase the fund's
income, as it can borrow at lower rates and invest in more loans at
When it comes to income, this fund is about as steady as they
come. This stock has consistently spewed out monthly paychecks for
over 18 years. It also hasn't lowered its dividend since 2004, even
during the worst financial crisis since the great
Right now, the fund pays a $0.10 monthly dividend. At today's
share price of $15.32, this means you can own this reliable
high-yielder and capture an 8%
(1.20/15.32) to boot.
Risks to Consider:
Don't get me wrong, this fund isn't without risk. AWF holds
corporate bonds and sovereign debt from countries such as
Argentina, Brazil, and Indonesia. Bonds from these countries can be
riskier than bonds from the United States. And AWF's U.S. corporate
debt does include some Companies that are not firing on all
Action to Take -- >
But, that said, if you are a more adventurous investor, AWF may be
a good high-yield opportunity for you. It has a diversified
portfolio and has proven to be a steady payer, even in tumultuous
-- Amy Calistri
P.S. -- Editor Amy Calistri is the chief investment strategist
behind the premium advisory, The Daily Paycheck. The goal of Amy's
advisory is to collect one dividend check for every day of the
year. So far, she's earning over $1,350 a month in dividends using
this strategy... If you'd like to learn how you can start
collecting your own "Daily Paychecks" -- including a few stock
picks to get started -- click here.
Amy Calistri does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC owns
shares of KO, AWF in one or more if its "real money"
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