Nov 18 2015

My Latest Buy: CHW

My newest stock buy is Calamos Global Dynamic Income Fund (NASDAQ: CHW), a closed-end fund that’s widely invested in individual companies, convertibles, and corporate bonds. At $7.74 per share, I bought 150 shares. With a monthly payout of 7 cents per share, I will receive $10.50 per month from CHW, which raises my projected monthly average dividend income to $654.88. Sweeeet!

However, there are always positives and negatives to any stock, so let’s examine what I bought:

Yield. At the buying price of $7.74 per share, CHW has a yield of 10.85%. That’s pretty good. and is in the ballpark (8-11% yield) of where I want to balance risk with gains.

History. Like many stocks, CHW cut it dividend during the depths of the Great Recession 2009. But since then its dividend payouts have slowly risen. Paying 5 cents per share from 2009-2011, then 6.2 cents from 2012-2013, and 7 cents per share from early 2014 to present. CHW’s distribution history seems to be one of slow and steady growth. I like that.

Institutional Ownership. Approximately 38% of CHW stock is held by institutional investors such as banks, insurance companies, retirement or pension funds, hedge funds, and mutual funds. That indicates a moderate to high degree of confidence in CHW.

Portfolio. Nearly 50% of CHW’s positions are in individual companies, nearly 30% is in convertibles, 20% is in corporate bonds, and less than 4% being in short-term debt. The top 5 sectors CHW has invested in are IT (18.5%), Consumer discretionary (16.4%), Financials (14.6%), Health care (13.0%), and Industrials (11.1%). Also, only 57% of CHW’s portfolio is in the US, so there’s international exposure as well.

Leveraged. CHW has an effective leverage of 28.78%, which is high but typical for most of the leveraged funds that I have bought into.

Age. CHW began in 2007, so it’s a rather young fund. As I have stated in previous posts, I do prefer older stocks that have been tested by 2-3 recessions, as this indicates the quality of management over the years.

Overall, I think CHW is a good, but not risk-free, addition to my dividend income portfolio.

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