12-04-2018, 10:25 AM
I think it's safe to say that the DBL 5.7c/mo distribution cut from 16.5c to 11c was surprisingly large. While a cut of some kind was generally feared/anticipated, the announced size stunned most observers. So what now?
DBL traded down a few percent to 18.91 today in response to the cut, leaving it with a (surely now!) earned distribution yield of 6.98%. Now imagine a prospective new investor evaluating multi-asset FI CEFs. VERSUS DSL (9.5+%), DMO (9.50-ish%), PCM (8.90-ish%), and PIMCO favorites PKO, PDI, and PCI all in the 8%-9% range, DBL at 6.98% looks pretty punk or (more gently) "uncompetitive."
While nothing goes in a straight line, IMO DBL needs to eventually settle in AT LEAST around 8% to avoid consistent de-selection versus similar CEF portfolios. The new 11c / mo distribution is $1.32 / yr. The DBL price that provides an 8% distribution yield is $16.50....nearly $2.50 or about 13% down from tonight's closing price. Of course, my prediction is worth precisely what you paid for it!
Other views?
DBL traded down a few percent to 18.91 today in response to the cut, leaving it with a (surely now!) earned distribution yield of 6.98%. Now imagine a prospective new investor evaluating multi-asset FI CEFs. VERSUS DSL (9.5+%), DMO (9.50-ish%), PCM (8.90-ish%), and PIMCO favorites PKO, PDI, and PCI all in the 8%-9% range, DBL at 6.98% looks pretty punk or (more gently) "uncompetitive."
While nothing goes in a straight line, IMO DBL needs to eventually settle in AT LEAST around 8% to avoid consistent de-selection versus similar CEF portfolios. The new 11c / mo distribution is $1.32 / yr. The DBL price that provides an 8% distribution yield is $16.50....nearly $2.50 or about 13% down from tonight's closing price. Of course, my prediction is worth precisely what you paid for it!
Other views?