Royce Value: Growth and Income

01/09/2004 12:00 am EST

Focus:

Gordon Pape

Editor and Publisher, The Income Investor and the Internet Wealth Builder

Gordon Pape is among Canada's leading financial advisors and is new to our coverage at the Digest . Pape and a team of financial experts publish five newsletters. Papes cover growth, income, and value investingand all three attributes are covered in his 2004 top pick, Royce Value.

"With interest rates at 50-year lows, many investors are looking for securities that will provide them with decent cash flow. But they would also like to benefit from the new bull market that has taken hold. You can have your cake and eat it too by investing in Royce Value Trust (RVT NYSE), our top pick for 2004. This closed-end fund, which focuses on small-cap stocks, was recommended in our Income Investor newsletter last May at $14.32. As I write, it is trading at over $17.

"As well as offering capital gains potential, this trust (which has been around for more than 15 years), provides good income. The December quarterly distribution is $0.36 a share, bringing the total payout for 2003 to $1.30 per share. The entire amount is taxable at long-term capital gains rates for US investors. The $1.30 payment represents a cash yield of 9.8%, based on the trust’s 2003 opening price of $13.25. Combined with the increase in market value, total return so far this year is almost 40%. If you are looking for a shoot-out-the-lights investment, this isn’t it. But if you want good cash flow plus some capital gains potential, ask your financial advisor about this one."

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