Monday, July 4, 2011

Still holding DRW, still happy: 13.47% yield


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This info was added Dec. 28, 2011. As of today it appears that DRW will miss paying its fourth quarter dividend. Ouch! The overall dividend yield for the year was more than 10 percent but still I was expecting about $400 come the end of December.


What happened? I found this explanation on the Net:


"DRW holds PFICs (Passive Foreign Investment Companies) in its portfolio. PFICs must mark to market each year (in Q4) and realize a gain or loss in those PFIC shares. PFIC loses are offset against PFIC gains, and then against portfolio income. The PFIC losses for DRW this year wiped out the gains and Q4 dividend income, therefore, no dividend distribution . . . "


I'm holding my position. I'm not overexposed and feel little concern. We'll wait to see what the yield is delivered at the end of the first quarter of 2012 and we'll hope the value of this ETF doesn't continue to lose ground. This missed dividend payment does add a whole new wrinkle to owning DRW.
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As you know, I'm retired; I need income. One of my favorite ETFs is DRW (WisdomTree Global ex-US Real Estate Fund.)

Let me make one thing very clear: This is not a buy recommendation. I am not a financial adviser. I am just a retired fellow trying to make ends meet. My investment in DRW goes a long way to enabling me to pay my bills.

DRW is presently yielding about 13.47% according to the ScotiaBank. Nice. It is up about 22.73% in the past 12 months. Nice, again.

I worry about the fiasco in Greece and how it might impact on my investments should Greece implode, possibly taking some of the other PIGS (Portugal, Ireland, Greece and Spain, possibly Italy) with it.

There is nothing I can do about that whole problem. It may blow; It may not. (I've got a strong feeling that the situation in Greece is a long way from being solved.) I've got a chunk of my portfolio in cash in order to weather a financial storm. And if my investments like DRW continue to be cash cows, I can go a few years without dipping into my principal.

And if there is a second big dip? I'm going to get burned — badly. On the other hand, I've got stuff in my sights to buy and I've got the cash to do it. Buying on the big dips makes a lovely profit-filled purse out of a sow's ear.

I'm watching Emera as a possible stock to add to my dividend-rich portfolio and AUSE as a possible ETF to add. During this recent, and still continuing, pullback in the markets, I've switched about one percent of my holdings into the TD Monthly Income Fund. My goal is to have 15% of my portfolio eventually in the TD fund and possibly as much as a full percent in Emera and other one percent in AUSE.

Good luck and good investing.

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