An "Enhanced" Play on Income
09/21/2017 6:00 am EST
My quest to position our model portfolio heavily in many high yield assets that pay out monthly has led me to recommend the Eaton Vance Enhanced Equity Income Fund II (EOS), explains income expert Bryan Perry, editor of Cash Machine.
This closed-end fund with a market cap of $723 million seeks current income with capital appreciation through investment in large and mid-cap common stocks and through using a covered call and options strategy.
The fund is trading at a slight discount to Net Asset Value and sports a current yield of 7.0% without the use of any leverage.
Heading into the teeth of the September-October time frame when the markets can trade in an increasingly jittery manner, I find it best to maintain exposure to high-profile institutional favorite stocks that will benefit from broader market volatility.
Hence the use of a well-managed covered-call strategy that has been serving us well in other holdings.
Looking at the portfolio holdings in EOS, the top 10 positions are like the starting lineup of a Super Bowl championship team that makes up about 42% of the entire portfolio. Shares of EOS have returned 21.4% year-to-date, right in line with the 20.7% year-to-date return for the Nasdaq.
Let’s put EOS in our Conservative High-Yield Portfolio and let the seasonal volatility of the markets work to our favor in the form of a monthly check. Buy EOS under $15.50.