BLE is a leveraged closed end bond fund. In normal times they borrow against bond holding at short term interest rates and buy more long bonds. This gives them added income that lets them pay above market dividends.
Recently the rate has been $0.41/yr. Today Yahoo Finance is reporting $0.62/yr ($0.051/mo) or 6.15% with shares closing at $10.25/sh.
Payments are lower when the inverted yield curve stops leverage. I infer the rising rate indicates the yield curve has flattened enough to resume leverage and higher payouts.
The price range over time is 8.77/share low to 17.76 on Nov 1, 2006. They pay dividends monthly. Highest on record is $0.065/mo or $0.78/sh.
As the yield curve returns to normal, potential for increasing tax free dividends. And potential for capital gains too.
As for its supposed 6.15% yield, that’s bogus, Here’s what Yahoo reports was paid,
Let’s project the next divs will also be the same 0.034 cents. Times 12 , that’s a mere a 0.408 cents per year. Divide that by BLE’s current close of 10.25, and you get a very underwhelming yield of 3.98%, plus market risk on the stock price, given the nature of its holdings, like some Puerto Rico bonds, though I do own Port of Portland’s bonds in several issues, hence can avail myself of their --to me-- double-tax free nature.
My suggestion? Avoid BLE and roll T-Bills instead while looking for a better opportunity, like some of the option-based ETFs that also pay monthly but with much more risk compensating yields.
Can you guantantee that the yield-curve will flatten and that BLE’s yield will increase? You’re hoping that’s the case. But interest rates tend to be hard to predict. In fact, no one knows what’s going to happen, though some guesses can be made based on the fact the US is losing a couple more wars of choice and printing money to cover its over spending, never mind that the non-western world is increasingly bypassing use of the $US dollar in trade settlements. Those factors suggest the US will have to increase rates if it wants to borrow.
If you want to buy BLE, then buy it for your own account. But don’t tout questionable, late-to-the-trade investents when safer, better paying opportunities are available.
One other thing to note about BLE is the somewhat high management fee (for a closed end bond fund). They charge 0.55%. That means that they take more than 10% of your annual yield (TTM) right off the top!
