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CLM’s 19% Yield Masks a 67% Payout Cut Since 2015
['Ryne Mauck']
24/7 Wall St.
The Yield That Eats ItselfA distribution yield near 19% sounds like a gift.
For holders of Cornerstone Strategic Investment Fund (NYSE:CLM), Cornerstone Total Return Fund (NYSE:CRF), and PIMCO Dynamic Income Fund (NYSE:PDI), that headline number can function as a slow refund of your own capital, delivered monthly, with a tax bill attached.
All three are closed-end funds, and each carries a specific structural cost that the marketing yield hides.
Shareholders who participate must send more cash into a fund whose per-share distribution has already been cut by 67% since 2015.
For PDI’s leveraged bond exposure, the Vanguard Total Bond Market ETF (NASDAQ:BND) offers lower yield, but no leverage cost, and no NAV premium.