The Madison Covered-Call & Equity Strategy Fund (MCN) fits the profile I’m looking for from both attractive portfolio composition and timing, explains growth and income expert Bryan Perry, editor of Cash Machine.
First and foremost, the fund pays a quarterly dividend with an annual yield of 10.28%. The next ex-dividend date is Sept. 15. So, if we buy in now, we’ll be entitled to the upcoming dividend of 18 cents, or 72 cents per share annually.
When I saw the makeup of the current portfolio, I was immediately impressed. Within the 41 holdings, the blend of technology, financial technology, industrials, energy and consumer discretion are what the market is favoring from a sector standpoint.
The management team has proven to be fairly adroit about stock selection and the timing to add and to weight the portfolio accordingly.
MCN is a straight up covered-call fund where 85.8% of current holdings are in U.S. stocks, 3.4% in Canadian stocks, 1% outside North America and the balance in cash.
Approximately 80% of the portfolio has call options written against underlying positions. The average call option contract is around 38 days, affording a steady stream of option income into the portfolio.
A fact sheet on the fund’s website spells out specifics such as its investment objective. With any investment, my aim is to buy into a strategy that has a focus of generating highly attractive yields and serving as a good steward of the assets under management.
The fund managers at MCN don’t use leverage and have about 15% of assets in cash. Let’s put this proven winner back to work for us now that the U.S. market is showing signs of stabilizing in an otherwise unstable global market.
