Tekla: High Yield in Biotech

12/08/2014 7:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Our strategy is to invest in areas that can’t help but burgeon over time; one such market is healthcare, which is booming, notes Mark Skousen, editor of Forecasts and Strategies.

One of my favorite closed-end biotech funds is Tekla Healthcare Investors (HQH), a Boston-based closed-end healthcare fund that primarily invests in biotechnology, medical devices, and pharmaceuticals.

Its top holdings include Gilead Sciences (GILD), Celgene (CELG), Biogen Idec (BIIB), and Amgen (AMGN).

It will also emphasize the smaller, emerging companies with a maximum of 40% of the fund’s assets in restricted securities of both public and private companies.

We recommended Tekla Heathcare several years ago when it was called H&Q Healthcare Investors and now we’re recommending it again. It has a great track record, having more than tripled since 2008.

Even so, it looks like a good deal. Tekla Healthcare is selling at only nine times earnings and it sports a rising dividend policy of more than 7% a year.

On October 1, it paid its most recent quarterly distribution of 56 cents per share, its seventh increase in a row.

The distribution consists of long-term and short-term capital gains. Currently, it is selling at a 2% premium to its net asset value of $31.25.

I suggest you add Tekla Healthcare Investors to your portfolio today and benefit from the biotech revolution and an above-average dividend and distribution.

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