Markets

The #1 Blunder Investors Are Making Now (and how to tap it for 7.5% dividends)

By Michael Foster

Today I want to show you one of the most ridiculously oversold funds. Not only is it absurdly cheap right now, but it also pays a 7.5% sustainable dividend.

Before I get into those big cash payouts and how theyaEURtmre possible, let me first explain why this fund is such an incredible bargain today.

Imagine that you could get shares in Microsoft ( MSFT ), Alphabet ( GOOG ) , Apple ( AAPL ) and JPMorgan Chase ( JPM ) for 5.4% less than the market price of all of these companies.

WouldnaEURtmt you buy as much as you could?

Well, now you can, thanks to the Eaton Vance Enhanced Equity Income Fund ( EOI ) .

This fund is trading for 5.4% less than the actual market value of its portfolio holdingsaEUR"known as its net asset value, or NAV. This is possible because EOI is a closed-end fund (CEF) , and CEFs very often trade for less than the value of the stocks and bonds they own.

And those holdings are the first reason why this fund should be high on your list.

Reason #1: A Quality Portfolio

Just look at what EOI is holdingaEUR"some of the safest, most profitable and fastest-growing American companies out there:

Reliable Blue Chip Stocks at a Bargain

ItaEURtms that high-quality portfolio that has resulted in relatively low volatility and a strong total return over the last decade. In fact, during that time, EOIaEURtms value has doubled:

Source: Eaton Vance Investment Managers

A Strong Growth Pattern

Yet a lot of investors simply donaEURtmt know this fund exists and arenaEURtmt buying it. Why is that?

The answer is so silly, itaEURtmll make you laugh.

Reason #2: The MarketaEURtms Big Mistake

Remember that EOI pays out a huge dividendaEUR"7.5%, in fact, which is 4 times the yield of the S&P 500. That means a lot of EOIaEURtms return comes in the form of cash payouts delivered to your brokerage account every month, like clockwork.

It also means that when you look up EOIaEURtms price return , you get this:

Looks Like a Dud aEUR

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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