AVK: Preserves Investor Capital And Maintains Consistent Dividends (Rating Upgrade)
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Cain Lee7.4K FollowersFollow5ShareSavePlay(13min)CommentsSummaryAdvent Convertible & Income Fund is upgraded to Buy, offering an 11.1% yield and trading at a 4.61% discount to NAV.AVK’s hybrid strategy, with 48.7% in convertibles and 41% in high-yield securities, targets high income and capital preservation.Leverage remains high at 37.7%, but declining interest rates should reduce risk and improve operating spreads for AVK.Consistent monthly payouts, tax-efficient distributions, and resilience through rate cycles make AVK attractive for income-focused, buy-and-hold investors. PM Images/DigitalVision via Getty Images Overview As market indexes hover near their all-time highs, it can be scary to accumulate equities at this time. However, there are many attractive opportunities across income funds as valuations remain suppressed due to higher interest rates. AdventThis article was written byCain Lee7.4K FollowersFollowFinancial analyst by day and a seasoned investor by passion, I've been involved in the world of investing for over 15 years and honed my skills in analyzing lucrative opportunities within the market.I specialize in uncovering high quality dividend stocks and other assets that offer potential for long term-growth that pack a serious punch for bill-paying potential. I use myself as an example that with a solid base of classic dividend growth stocks, sprinkling in some Business Development Companies, REITs, and Closed End Funds can be a highly efficient way to boost your investment income while still capturing a total return that follows traditional index funds. I created a hybrid system between growth and income and manage to still capture a total return that is on par with the S&P.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow does AVK’s leverage impact its outlook amid declining rates?With leverage at 37.7%, AVK’s risk profile should improve as rates decline, reducing negative impacts and potentially enhancing earnings growth.What is the primary source of AVK’s total return, and how should investors position?Most returns come from high, consistent distributions rather than price appreciation; AVK suits investors prioritizing income over capital gains.How tax-efficient are AVK’s distributions for investors?About 70.9% of recent distributions are return of capital, offering tax deferral benefits and making AVK suitable for taxable accounts seeking income.Recommended For You