High-Yield Dividend Stocks: Up to 13.6% Yields
- Investors sometimes worry about dividend cuts in high-yield investments like closed-end funds (CEFs).
- These funds suggest that a dividend cut alone shouldn't deter investment.
- The Liberty All-Star Growth Fund (ASG), with an 8.2% yield and a 7.7% discount to net asset value (NAV), invests in large- and midcap stocks like NVIDIA and...
Don’t let dividend cuts scare you away. Discover how strategic adjustments in closed-end funds (CEFs) can signal a profitable turnaround, not trouble. We dissect three high-yield CEFs – Liberty All-Star Growth Fund, BlackRock Technology and Private Equity Term Trust, and Pioneer High Income Fund – revealing situations where reduced payouts preceded significant returns, sometimes even exceeding expectations. Learn how savvy investors spot opportunities. News Directory 3 provides key insights into navigating the complex world of dividend stocks.Is a dividend cut always a red flag, or can it be a buying signal? Discover whatS next.
Dividend Cuts Can Spark Closed-End Fund Turnarounds
Updated June 23, 2025
Investors sometimes worry about dividend cuts in high-yield investments like closed-end funds (CEFs). However, a dividend cut can actually signal a profitable turnaround. Examining three CEFs demonstrates this pattern: dividend cuts followed by ample returns.
These funds suggest that a dividend cut alone shouldn’t deter investment. It might even be a buy signal for savvy investors seeking income stream and capital gains.
The Liberty All-Star Growth Fund (ASG), with an 8.2% yield and a 7.7% discount to net asset value (NAV), invests in large- and midcap stocks like NVIDIA and Meta Platforms.Its dividend policy pays 8% of NAV annually, leading to fluctuating payouts.despite a recent dividend adjustment,ASG delivered a 162% total return,including special dividends.
The BlackRock Technology and Private Equity Term Trust (BTX), yielding 13.6%, holds tech stocks like NVIDIA, Amazon, and Apple, along with private equity investments. BTX replaced its managers and has recently traded at an attractive price. Sence April 2025, BTX has returned 16%.
Even with a recent dividend cut, BTX’s yield remains high. The fund’s discount has narrowed, contributing to its total return. A gradual payout decline is acceptable if the portfolio continues to rise.
The Pioneer High Income Fund (PHT) holds high-yield corporate bonds. Despite market volatility, PHT’s portfolio has appreciated. It has had a 15.6% annualized return over the last three years, recovering from the 2022 selloff.
A 12% payout cut occurred while PHT delivered strong returns. Capital gains compensated for the lower dividend. Every dollar invested three years ago now earns a 9.6% yield on the original cost and is worth $1.17.
What’s next
These examples illustrate that dividend cuts are just one factor in evaluating high-yield investments like CEFs. They can even trigger a turnaround. Diversification and periodic portfolio rebalancing are essential for securing a strong income stream and long-term capital gains.