Top Picks 2016: Tekla Life Sciences Investors
01/19/2016 7:00 am EST
Our Top Pick for income-oriented investors is a closed-end fund that is invested in a number of publicly traded and privately-held companies doing work in the life sciences sector, explains Nate Pile, biotechnology sector specialist and editor of Nate's Notes.
Indeed, one can think of Tekla Life Sciences Investors (HQL) as a "biotech mutual fund." Meanwhile, the fund has a policy of paying out 2% of its net assets each quarter.
Though investors can request this quarterly payout to be made in cash, the default is for them to be paid in additional shares...and this "dividend reinvestment" route is the one that I encourage my subscribers to take.
To be sure, you can get more bang for your buck by owning individual stocks in the biotech sector.
However, investing in HQL allows investors to obtain some nice diversification in this very important sector with a single purchase, while also helping to avoid the volatility that often goes along with owning biotech stocks.
And it also gives them a nice quarterly payout while they wait for the companies held by the fund to grow and mature over the long-haul; and successful investing in biotech is all about taking a long-term view. HQL is a strong buy under $22 and a buy under $26.