The stock market is recovering. How about jumping in right now on some bargins while the jumping is good. Consider this recent article: http://money.msn.com/mutual-fund/your-favorite-stocks-15percent-off
All I can say is be careful where you leap. If you are considering a closed end mutual fund for example because they have a stellar record of good steady dividend payments; you should look closely at where those dividend payments came from. Sometimes a portion is actually a return of capital instead of from profits on investments. Consider the following example:
Zweig Fund (ZF) is trading at a discount of -12.28% which means the individual stocks this fund owns are worth more than the fund. Hope right in if you expect the fund manipulators to rectify this soon. Meanwhile the fund is paying a nice steady attractive dividend that is designed to keep investors happy.
“The Fund has a Managed Distribution Plan to pay 6% of the Fund’s net asset value on an annualized basis. Distributions may represent earnings from net investment income, realized capital gains, or, if necessary, return of capital. The board believes that regular, fixed quarterly cash payouts will enhance shareholder value and serve the long-term interests of shareholders. You should not draw any conclusions about the Fund’s investment performance from the amount of the distributions or from the terms of the Fund’s Managed Distribution Plan.
The Fund estimates that it has distributed more than its income and net realized capital gains in the fiscal year to date; therefore, a portion of your distributions may be a return of capital. A return of capital may occur when some or all of the money that you invested in the Fund is paid back to you. A return of capital does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income”.”
In other words you should tread carefully and check out the funds individual holdings. If they are poised for a recovery in your considered opinion then the fund just might keep paying the attractive dividend and you might also reap the recovery capital gains. Or the market manipulators might decide to skip this fund and in the longer run the fund is forced to lower the dividend payout and the fund selling price takes a nosedive.
It all comes down to being an educated investor. Don’t buy something simply based on an attractive dividend. You might just be getting some of your own money back.