Alpine Dynamic Dividend — My Dividend Generator
Post viewed 1669 times, 4 so far today
As I stated before, my investment objective is to generate passive incomes from investments. To reach that goal, I am trying to build a portfolio with dividend-paying stocks and mutual funds/ETFs. Among my dividend generators, one that I particularly like is Alpine Dynamic Dividend Fund (ADVDX). I started investing in ADVDX in April 2006 and for the past year ending June 30, 2007, the fund has an annual yield of 13.28%, far greater than any other dividend oriented equities in my portfolio. At the same time, the fund’s dividend-adjusted share price also grew from $11.30 to $13.28.
What gives ADVDX the ability to deliver such a high yield is a unique approach the fund’s managers are taking in identifying and investing in high dividend-paying stocks, domestically and internationally. The fund’s investment strategy can be summarized as dividend capture, value and growth (semiannual report, PDF file). According to fund manager Jill Evans, the dividend capture strategy consists two parts and the first and most effective technique in generating dividends is called high-yield rotation (PDF file), which invests in stocks at the time when dividends are paid:
Tax law mandates that stocks be held for a minimum of 61 days after purchase (including the ex-date) for the dividends they generate to qualify or preferential tax rates (“qualified dividends�?). In High-yield Rotation, we look to purchase high dividend paying stocks and hold them for the minimum 61 day period necessary to achieve qualified dividends. We then rotate that money into other high dividend payers, aiming to capture more than our quarterly dividends per year.
As the fund engages in short-term investing as opposed to the buy-and-hold approach which could hold a stock for years, one can expect a high turnover ratio of the fund. Indeed, according to Morningstar, ADVDX’s turnover ratio is 192%.
In addition to rotation, the fund also invest globally in stocks that pay special dividends by, again, applying the technique to buy the stock at the right time to collect high dividend payout. At the same time, the fund also keeps an eye on the stock’s total return.
ADVDX’s strategy has produced amazing results since its inception nearly four years ago. From September 22, 2003 to April 30, 2007, the fund has an annualized return of 22.43%, compared to the 12.86% return of S&P 500 index. The following chart shows the hypothetical growth of ADVDX since its inception.
As of April 30, 2007, the fund’s top 10 holdings are:
- Atlas Copco
- Bank of America
- JM AB
- General Electric
- Macquarie Infrastructure
- Regal Entertainment
- Altana AG
- PepsiCo
- United Technologies
- Diamond Offshore Drilling
Currently, ADVDX has nearly 60% of its assets invested in mid- and small-cap companies. The fund pays monthly dividend and has an expense ratio (ER) of 1.18% and a minimum initial investment of $1,000.
Early this month, TheStreet.com TV featured the fund’s co-manager Kevin Shacknofsky as he talked about the fund’s investment strategy and dividend-paying stocks.
Featured Financial Products
- Seeking higher returns for your cash? Take a look at the latest interest rates from leading online banks and find out where to get the most for your money.
- Earn up to 5% cash back from these cash back credit cards while shopping at gas stations, grocery stores, or online.
Related Articles You Don't Want To Miss
Trackbacks & Pingbacks
- Pingback by Dividend Beyond the Border | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing on November 6, 2007 @ 11:01 am
10 Comments
Share Your Thouhgts
Your opinion matters. Please use the form below to share your thoughts on Alpine Dynamic Dividend — My Dividend Generator with us.Recent Entries
- TradeKing $50 Bonus Ends Tomorrow
- Regular Mortgage versus Reverse Mortgage: A Comparative Study
- Happy Thanksgiving!
- Why You Should Make Room for Charitable Giving in Your Budget
- Quarterly GDP Down 0.5% in Third Quarter - Chart of the Day
- Firstrade Black Friday Promotion: Get a FREE iPod Nano
- Get Your Free EASEUS Partition Manager Pro
- FDIC Problem Bank List Now Includes 171 Banks
- Safest Cars from Insurance Institute for Highway Safety
- American Express $20 Cashback for Shopping at Walmart
- Quicken Online New Features and Demo Video
- Update on DollarSavingsDirect Account
- Weekend Linkage - November 23, 2008
- Citi Closed My Dividend Platinum Select Card
- The Growing List of Failed Banks
- iShares 529 Plan: Save for College with ETFs
- Dow, The Near 6-Year Low
- Transfer A Brokerage Account: How Much Does It Cost?
- ShareBuilder Educational Account Promotion: 3 Free Trades
- China Life Insurance: 5 Years on NYSE
- Get Your Free ZoneAlarm Pro Firewall Today
- IGoChecking Has The Best Interest Checking Account Rate
- NCUA Insurance Is As Good As FDIC Insurance
- Weekend Linkage - November 16, 2008
- Equifax Credit Monitoring Silver Free Two-Year Subscription
Thanks Sun, this is fantastic! I am all about investments with high yields or dividends. During the accumulation stage of investing it is amazing to see how quickly the reinvested dividends can grow. Then down the road when you need to start taking money you can begin taking the dividends as income.
I guess I’ll have to take a look at this one a bit and see if it has a place in my portfolio. Thanks!
You cannot go wrong with General Electric. It’s good to know there is useful information out there. Thanks for sharing. Seems like another good income stream
Sun, I am not sure whether I fully understand this fund. What if other funds try to copy the same strategy ( dividend capture & rotation) eventually they would start pushing the stocks higher before the planned buy and lower before planned sell.
Sun, do you invest in this fund directly or through a broker? Is it in a taxable account? You’ve really piqued my interest here.
Novice: Yes, if everybody starts to use the same technique, then the technique and the fund will get killed. However, I feel that the technique is the result of the fund’s investment objective, i.e., to generate maximum dividend. I don’t think that every fund will have the same objective, even for some income funds that invest in dividend paying stocks. Many fund take the buy-and-hold approach and invest in companies that have long dividend growth history. That investment objective may determine that they are going to use the same strategy ADVDX is using.
Brad: I bought the fund last year from Fidelity when they don’t charge commissions (now I believe they do). No particular reason. I just want to reduce the number of accounts I have (I usually buy mutual funds from the fund company directly). It’s in the taxable account since I want to have the flexibility to purchase more shares. However, most of the fund’s dividend distribution qualifies for a lower rate (15%). So it’s not too bad.
Sun–
Thanks. It seems like Capital Gains would be a real problem too, with all of that turnover. Is that not the case? I looked into Alpine and it seems I could open a Roth IRA with them, so I’m exploring that option, especially if they have automatic dividend reinvestment.
Brad: This is what I found from their annual report:
“For the six months ended April 30, 2007, ADVDX paid $0.98 in dividend income, with nearly all of the distribution estimated to be qualified for the maximum taxable rate of 15%.”
And when I check my 2006 1099 form, all the dividend distributions are qualified dividend, not capital gains. So even with the high turnover ratio, the taxes aren’t that bad to hold it in a taxable account. If you invest directly with the fund company, you will get the dividend reinvest option. The fund is worthless if the dividends are taken as cash.
Not only do I own a slug of advdx, I’ve recently discovered a unique ‘income fund’(conservative allocation fund)for pre and retirees, IMSIX.
Taylor: I will take a look at the fund you mentioned. I didn’t know that fund, but with a yield at 6.7%, it sure looks interesting.