Tuesday, February 19, 2008

* Dynamic Dividend Investing - Feb/08 Update

Back in December, I posted an article titled "Dynamic Dividend Investing" that discussed a strategy that allows you maximize annual dividend income while taking into account the effect it will have on your taxes. In the article I focused on Alpine's Total Dynamic Dividend Fund (AOD), a closed-end fund that employs this strategy.

In keeping with this week's high-flier theme, I thought it would a good time to check in and see how AOD has done. After my initial review, I decided to purchase a small quantity to get better acquainted with AOD. My initial purchase of AOD was at $18.93/share on 12/7/2007. Since then the shares have dropped 11% to $16.86 (as of 2/15/2007). When you take into account the dividends paid, including the December 2007 special dividend of $0.54/share, AOD's decline is 6.80%.

On February 11th, AOD announced that it would pay $0.18/share monthly dividend for March, April and May. It has paid $0.18/share since May 2007. My yield on cost (YOC) is 11.4%. With the recent decline in share price, AOD current yield is currently 12.8%. I would rate AOD as my 2nd riskiest holding. However, at 1.45% of my dividend income portfolio, I feel comfortable slightly increasing my position in March.

It will be interesting to see if AOD increases its dividend in May. I'll report back then.

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