written by reader GABUX from Gabelli Funds

By skt4mn, May 31, 2013

I found this mutual fund in 2010 and have stayed with it through thick and thin ever since. It generates a nice portion of my retirement income. In another couple years, I will have received all of my original investment back and still have the stock. It’s tax advantaged so I pay very little in taxes on the income. Essentially, that means a lot of the return is classified as a return of investment and not a true dividend. I don’t care, in fact, I like it…less to pay in taxes.

I thought this would be a good place to let other people know about it and find out what they think of it. I suggested it to my sister but her financial planner didn’t like it. Could it be that he was influenced by the fact that he wouldn’t receive any commission? After losing a lot of her money for her in the market, she eventually went with an annuity which was about as bad a choice as I could think of.

Zack’s rates it as their #1 mutual fund for what that’s worth. Check it out, it might be something your readers will like if they are looking for immediate income or, if they’re looking to grow their account for future retirement, they can reinvest the monthly returns and end up with a boat load of stock and more returns.

Since I wasn’t interested in making money from a rising stock value, it changed my entire investing strategy. Sure, I was glad when it went up and unhappy when it went down but my thought was everything goes in cycles. As long as the company continues to pay that .07 per share each month, the value of the stock was a small consideration. After all, I can’t take it with me so the only thing that counted was the income. The fact I got into the market at a relatively good time was also a bonus.

Anyway, I hope people will check it out and find it as a compelling investment as I have.

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.



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John C
John C
June 3, 2013 7:03 am

It’s surprising to me how often a high dividend, taken in isolation, can put people off the bigger picture. Gabux has never recovered off its crash lows when it went from the 9’s to the mid 5’s. I was lucky enough to bail in May of 11 around the mid 6’s, about what I had paid. In the two years since, you’ve gotten roughly a buck and half in divs and lost a buck in value. Your 50 cent net gain looks pretty weak against a 300 point S&P gain (22%)in that same time period.
Yes the div is consistent but the lack of price appreciation proves they can’t earn that div and all you have been getting is return of your own capital. The price seems to have stabilized in the mid 5’s but there are serious questions as to whether they can continue to pay that div or whether they’ll have to reduce it at some point to preserve the price of the fund. Be very careful with this one.

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John Doe
John Doe
January 28, 2015 12:23 am

Gabelli announced (January 15, 2015) a 2 to 1 reverse stock split. In effect, your monthly distributions will now be cut in half. You should sell now before the NAV price tanks due to Gabelli having to cover the mass exodus.

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