Thursday, March 29, 2012

DRW fails to deliver March dividend

DRW: up 14.66%
The Wisdom Tree Global ex-US Real Estate Fund (DRW) did not have a distribution for March. Ouch! As a retired investor needing dividends to live, the failure of DRW to deliver a dividend hurts. I only have a small fraction of my portfolio invested in DRW. I will get by without the dividend but it will be missed.

On the upside, the yield is still rated as 4.95 percent as it has paid out twice in the past four quarters.

DRW invests in PFICs (Passive Foreign Investment Companies) and their losses are deducted from the distribution. Gains are added in up-years and losses are subtracted in down-years. The link below is a good description of these PFICs . . .

http://www.investopedia.com/terms/p/pfic.asp#axzz1qQX0hscS

Although the last two DRW dividends have failed to materialize, the value of the ETF itself has been climbing. I won't be buying more WisdomTree Global ex-US Real Estate Fund but I won't be selling it immediately either.

I'll see what transpires come June 30th or so. There may be a good dividend in the future. In fact, I'm sure there is --- but when? And will I be there to enjoy it? If DRW gains a little share value, while continuing to fail to meet my minimum yield needs, I will dump my units and move on. "There's nothing to see here."

I fear DRW is simply not dependable enough for an investor in my position. I'll blog on this again come late June at the latest. On the other hand, in the past it has paid handsome dividends. It may yet deliver a yield better than five percent, earning its place in my portfolio.

Here is another link to info on PFICs. Do a search using the letters PFIC.

No comments:

Post a Comment