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Warning: This 14% Dividend Fails ALL of My Safety Checks

By Michael Foster

If youaEURtmre like most folks, you likely at least take a second look when you run into a big dividend yield, like, say, 14%.

Think about that for a second: drop, say, $100K into a fund like that and just seven years later, youaEURtmd have collected enough in dividends to recoup your entire initial stake.

Everything else is gravy!

But when we come across a dividend that big, we need to do a second-level analysis to make sure itaEURtms sustainable. And that brings me to the closed-end fund (CEF) I want to tell you about todayaEUR"it gives us that 14% yield but misses the mark on just about every factor you could imagine, giving us:

  • Impossibly high management fees
  • A portfolio that underperforms the market
  • An overpriced valuation, and aEUR

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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