GOF: 12% dividend yield, outperforming monthly payer (NYSE: GOF)

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Looking for some diversification in your portfolio? The Guggenheim Strategic Opportunities Fund (NYSE: GOF), a closed-end fund, or CEF, which offers a combination of bond and equity strategies. We started covering GOF in early 2022. So So far in 2022, GOF has outperformed these 2 other bond funds, and the S&P 500, by a wide margin.

Over the past year, the GOF has fallen somewhat behind the S&P on a price basis, while its dividend yield of around 12% brings its total return to -5.26%, still lagging. on the S&P of -1.06%, but better than the -9.3. % for these 2 other bond funds:

GOF vs. AGG vs. BND vs. SPY performance

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“The Fund’s investment objective is to maximize total return through a combination of current income and capital appreciation. The Fund will pursue a relative value-based investment philosophy, which utilizes quantitative and qualitative analysis to seek to identify securities or differences between securities that deviate from their perceived fair value and/or historical norms.

The Fund’s sub-advisor seeks to combine a portfolio of credit-managed fixed income securities with access to a diversified set of alternative investments and equity strategies. » (GOF website)

GOF has $1.95 billion in assets under management, with 82% of its holdings based in the United States. Management uses a leverage of 23.5% (compared to 30% earlier in 2022) and the expense ratio is 1.83%. Average daily volume is 450,000, with 97.65 million shares outstanding. The Asset/Debt ratio is 4.53X:

GOF Fund Profile

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High yield corporate bonds and bank loans are the 2 largest concentrations, at 34.3% and 32.3% respectively, followed by cash and equivalents at 24.4%, asset-backed securities , ABS at 13.6%, Investment Grade Corporate Bonds at 9.3% and Preferred Securities at 5%.

Overall, fixed income represented 80% of GOF’s portfolio as of 4/30/22, with equity strategies down to less than 1% from over 13% as of 1/31/22.

GOF Sectors

GOF website

The GOF’s top 10 holdings were mostly corporate bonds and made up only about 7% of its holdings, as of 4/30/22:

Top 10 GOF Holdings

GOF website

Management reduced the weighted average duration to 3.34 at 4/30/22 from 4.59 at 1/31/22.

Credit quality has moved more towards sub-investment grade, with investment grade, (AAA – BBB), at 26.11% at 04/30/22, compared to ~48% at 01/31/22 , while ~67% of investments are rated up to non-investment grade, (BB and below):

GOF credit quality

GOF website

NAV pricing:

At its 6/9/22 closing price of $17.67, GOF was selling at a premium to its 6/8/22 net asset value/share of $14.27, which is above its premiums over 1, 3 and 5 years of approximately 20.3%, 14.7% and 12.2%, respectively.

GOF Navigation Pricing

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Division :

At $17.67, the GOF yields 12.37% and becomes ex-dividend on 6/14/22, with a pay date of 6/30/22. Management has maintained the monthly distribution at $0.1821 since the second quarter of 2013.

GOF dividends

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Parting Thoughts:

Although GOF has outperformed so far in 2022, you might want to wait for a lower premium. Buying CEF at premiums lower than historical premiums or at discounts deeper than historical discounts can be a useful strategy.

If you’re interested in other high-performance vehicles, we’ve got them covered every weekend in our items.

All charts by Hidden Dividend Stocks Plus, except where noted.

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