Deployed a little cash from checking.

music selection:  “Double Nature” — Mustasch

I had about 13,400 in checking this morning.  I’m targeting 10,000 so I decided to send the extra to my Wells Trade brokerage account.  To that end, I wanted some more fixed income.  I like PIMCO Dynamic Income Fund (PDI).  The distribution has been stable and growing a tiny bit over a decade or so.  The fund is also at roughly its inception price after taking a COVID-19 hit.

Ordinarily, I wouldn’t buy a closed end fund for more than NAV.  But this one routinely sells for a 20% premium and is available for only 9% premium at the moment.  I got 136 shares at 25.00 each.  Assuming the trailing twelve months distributions, that is an indicated yield of 12.26%.  This is a very safe yield with a conservatively managed fund.  The fund will be slightly more volatile than BND as it includes foreign issues and uses 24% leverage.  I’m comfortable with this as a “hold forever” bond allocation.

I added 416.98 in annual distributions by buying this. That is good for 34.75 a month.  This brings the monthly distributions in WF to checking up to 141 a month.  Total expected inflow to checking is now 22,160 a year versus a budget target of 18,000.

Devour your prey raptors!

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Income play – bought PDI

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8 thoughts on “Income play – bought PDI

  • July 7, 2020 at 7:23 pm
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    Interesting fund. My screen shows a TTM yield of $2.65 or 10.6%. Still very high.

    Also not sure about how conservatively run this fund is. The profile says it invests in “securities of any type and credit quality, with varying maturities and related derivative instruments.” To me that means junk bonds, bankrupt bonds, subprime loans, and futures. What did you find under the hood?

    Reply
    • July 8, 2020 at 12:00 am
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      There is also a special annual distribution in December each year. The 10.6% is the indicated yield for “normal” distributions. I like PIMCO. Their management is best in biz in my opinion. US and Western Europe holdings are very solid. Most of the rest is “unrated” so they must be doing their own dd.

      Reply
    • July 10, 2020 at 12:02 pm
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      Chris B, I’ve seen you leave many comments on here and you seem knowledgeable about a lot of different things. If you care to share and feel comfortable in this public forum, would you care to say anything about your background? Do you have a blog? (I assume no) Where do you or did you learn about investing? Thank you.

      Reply
      • July 14, 2020 at 7:13 pm
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        No blog. MBA. Learned everything I know about investing by losing tens of thousands of dollars and missing out on hundreds of thousands in gains.

        Reply
        • July 15, 2020 at 1:37 pm
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          Interesting. I did an MBA but had to “unlearn” that to trade options. They made us “prove” (with the One High And Holy Mathematics [Amen]) that the markets were perfectly efficient and the only rational course was to index.

          Reply
          • July 15, 2020 at 6:44 pm
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            There was a nice discussion of this on the MMM forum in the “options heretics thread” that you started in June. ChBstrd had an interesting thought that with options, you are basically betting against a supercomputer that is probably better at pricing and risk probability than you are.

            I think your response was something in the realm of: “that may be true for options that have deep liquidity”

            I still don’t know what I think, and maybe there is no way to know in advance what strategy will be best in what situations.

        • July 15, 2020 at 5:49 pm
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          Sounds like a wealth of knowledge and no overconfidence… and probably a very interesting story there, if you ever care to share.

          I’ve heard you offer thoughts on various stocks here and there… I wish you would write a guest post on this blog about your general approach and your thoughts on this current market, but I have a feeling that is not something you would be interested in doing. Failing that, maybe I could ask… are there other sources that you go to for investment/market information that you find insightful or helpful?

          Also: I go back and forth on whether it is a fool’s errand to try to time the market and/or pick stocks. And even if you beat the market consistently for years, it still isn’t clear. Most options seem priced as though price movement is a random walk.

          In the active part I do a lot of put writing, often for 0.7-1.5%/month premiums (8.4-18% annualized, as FV might say). Have only been doing it for a couple years though. Try to do it for stocks I’d be happy to hold if assigned. Have considered getting into spreads, similar to how FV does it, but have so far held back. I appreciate FV’s documenting trades and including the rationales at the time they are entered.

          Thank you, have a good one.

          Reply
  • July 10, 2020 at 3:49 am
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    For CEFs I like HTD, UTG, UTF, QQQX, DSL, STK. I do think PIMCO has some really good CEFs, but I refuse to pay a premium and they pretty much never sell at a discount.

    I’m mainly a dividend growth investor though. Most of my money is in etf VYM.

    Reply

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