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This
Tax-Advantaged Fund has a 7.1% Yield and
3-Year Annualized Gains of +15.4% |
Published:
April 21, 2008
Eaton Vance is a
leader in the tax-efficiency movement and has launched a number
of funds designed specifically to reduce tax exposure, including Eaton Vance Tax-Advantaged
Global Dividend (NYSE: ETG, $24.36).
ETG is a broadly
focused fund with a heavy weighting in foreign markets. The primary goal
is simple: distribute a high level of dividend income that
qualifies for the reduced tax rate. The managers don't
simply toss any stock that qualifies into the portfolio;
they focus on companies that are likely to raise dividends
and have substantial capital appreciation potential.
At the moment, the portfolio includes roughly 130 stocks,
and the high-yielding utility, energy and financial sectors
represent more than half of the fund's assets. From a
geographic standpoint, the portfolio is split almost equally
between North America and Europe.
Following a sharp increase last April, shareholders can
currently expect monthly distributions of $0.1438 per share. That works out to an
annual payment of about $1.73 per year, for a yield of 7.1%. And
if the past is any indication, then the lion's share of those
payouts will be taxed at the favorable 15% rate.
For the fiscal year ending October 31, 2007, the fund reported
net investment income (after paying dividends on preferred
shares issued for leverage) of $124.5 million, or $1.63 per
share -- and 100% of its ordinary income qualified for the
reduced rate.
Meanwhile, shareholders were treated to total returns (dividends
plus appreciation) of +27.2% for the year, versus just +10.8%
for the
benchmark Russell 1000 Value Index. And over the past 3 calendar
years, ETG has returned an average of +15.4%.
In recent months, ETG's managers have countered the threat
of rising inflation by shifting into hard assets -- a move that
has already paid off. And looking ahead, the fund has just
secured the financing to redeem all of its $750 million in
preferred shares and will begin using lower-cost debt to fund
its leverage -- which should leave more cash left over for
dividends, helping to make it a good fit for anyone looking to
maximize their after-tax global income.
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Nathan Slaughter
Editor
Half-Priced Stocks, The ETF Authority
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Stocks |
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Income Security
of the Month
Our "Income Security of the Month" for May 2008 invests in
a fast-growing overseas market that doesn't get much exposure in the
mainstream financial press. And although it typically makes enormous
annual dividend payments -- it has paid an average dividend of 24.5%
per year over the past five years -- this fund is perhaps most
appealing for its total return potential. Specifically, the fund has
delivered total returns of +297.3% since 2003, and
it ranks in the top 10% of its category over the past decade.
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Top
10 Stocks for 2008!
Since we began publishing this report back in 2003, the picks we've
featured have consistently beaten the broader market -- delivering average
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Ten Stocks for 2008. |
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