When the price is above the cloud, the market is shining on your share.
When the price is below the cloud it’s raining on your parade.
When the price is in the cloud the direction is the known unknown.
Currently the uptrend is in place.
Thursday 24 September
BlackRock Energy & Resources Inc Trust PLC ex-dividend date
Chelverton UK Dividend Trust PLC ex-dividend date
City of London Investment Group PLC ex-dividend dat
HgCapital Trust PLC ex-dividend date
Living REIT PLC ex-dividend date
Lowland Investment Co PLC ex-dividend date
Mercantile Investment Trust PLC ex-dividend date
Patria Private Equity Trust PLC ex-dividend date
Personal Group Holdings PLC ex-dividend date
Real Estate Credit Investments Ltd ex-dividend date
If You Own This 12.7% Dividend, Sell It Yesterday
Michael Foster, Investment Strategist
Updated: September 14, 2026
Usually in this space, we dig into 8%+ paying closed-end funds (CEFs) set to hand us strong returns and large income streams.
Today, we’re going to do something different and discuss a once-great fund that, sadly, is far past its glory days.
Why?
Because this fund highlights one of the dangers of high-yield investing. That would be the risk of getting too comfortable with a large payout—and ignoring the signs telling us it’s time to take our profits and walk away.
That’s not easy for those of us who invest for dividends! Especially when you have an income stream as big as the one this fund offers (a 12.7% annualized yield) rolling in.
The fund in question is the PIMCO High Income Fund (PHK), which has been around since 2003 and, for a long time, was handing investors strong total returns that were made up, in large part, by PHK’s outsized payout.
Take a look at how this fund (whose market price–based return is shown in purple below) outran the benchmark S&P 500 ETF (in orange) over its first decade of existence.
PHK Trounces Stocks
The thing to take note of here is that this is not a stock fund: PHK holds a raft of corporate bonds, municipal bonds, mortgage-backed securities and foreign bonds.
It’s certainly not a straightforward portfolio, but that’s no surprise when you consider that PHK is managed by PIMCO, which has over $2 trillion in assets under management. That makes PIMCO one of the biggest bond investors in the world, so it’s got very particular expertise here.
It’s an advantage we know well at my CEF Insider service, where we’ve held PIMCO funds in the past. In fact, we hold one now: the PIMCO Dynamic Income Strategy Fund (PDX), which has returned around 17% for us since we bought it in March 2025, despite a very challenging market for bonds.
But I digress—back to PHK, which, like many PIMCO funds, has a history of trading at a premium to net asset value (NAV, or the value of its underlying portfolio). That’s because PIMCO’s pedigree in the fixed-income space is no secret among investors.
And as you can see below, in the first few years after PHK’s launch, it bounced around par before breaking out to a big premium following the 2008 financial crisis.
2008 Mess Sent PHK’s Value Soaring
That’s because PHK not only survived that crisis but profited by picking up top-quality bonds at fire-sale prices. This drove PHK’s market price up so far beyond its NAV that it traded at a roughly 87% premium to NAV at one point. That’s right: Investors were so impressed with PHK that they were willing to pay $1.87 for every dollar of the fund’s assets!
The fact that the fund held its payout steady throughout that time certainly helped, as did its habit of paying regular special dividends. Plus, that strong payout history came despite some difficult market conditions: By the early 2010s, interest rates were low, so PHK was one of the few places where a reliable yield could be found.
But all good things must come to an end.
PHK Goes From Dividend Hero to Villain …
After its first decade, PHK struggled to maintain its payouts and, around 12 years post-IPO, cut the payout for the first time. That cut was followed by more, and the dividend now sits 60% below where it was at the time of the fund’s IPO.
This came as the fund’s strong outperformance, on a market-price basis, also came to an end after its 10th birthday, as you can see in purple below.
… As Its Total Return Fell By the Wayside
It’s no surprise that investors kept selling off as its performance got worse, and that big premium shrank to today’s 1.1%. Historically speaking, that sounds like a bargain. But based on PHK’s fundamentals, it’s still too expensive.
PHK Barely Stays in the Green
Over the last year, PHK has posted a 1.8% total return, on a market price basis—less than you’d get from a savings account at your local bank. From that perspective, any premium makes no sense—and it makes even less sense when we consider that the average CEF now trades at a 5.7% discount.
What happened?
In a nutshell, PHK couldn’t build on the timely bond buys it made nearly 20 years ago. When those fire-sale purchases matured, the fund was forced to compete in a less oversold, more rational market. And the short-term magic vanished.
That’s the real takeaway: Just because a CEF is strong today doesn’t mean we should expect it to be so forever. When the fund, or the market, changes, we need to pay extra close attention. In the case of PHK, it was a steady decline in NAV beginning in the early 2010s, compared to that strong performance in the latter part of the previous decade, following the financial crisis.
and sells for 73 Cents on the Dollar
Michael Foster, Investment Strategist
Updated: September 21, 2026
One thing we love to find as income investors? A situation where a double-digit dividend is coming our way—at an undeserved double-digit discount.
Every now and then, a situation like that can get truly extreme. These are the times when we really want to take a closer look.
This is the kind of setup we have with a closed-end fund (CEF) called FS Credit Opportunities Corp. (FSCO) right now.
I’ll cut right to the vitals. As I write this, FSCO yields 13.7%.
The discount? It sits at 27%.
In other words, this fund is now on the table for just 73 cents on the dollar. As recently as last year, it traded above par. It also stands out next to the 6.3% average discount among CEFs tracked by my CEF Insider service.
However, I see that discount narrowing again in the months ahead, for a reason that may surprise you: the elevated odds of another stock-market drop.
Why do I say that? The reasons likely won’t surprise you. They start with the Iran conflict, which has sent crude back above $100 a barrel while the Strait of Hormuz remains effectively closed. And now we’re hearing calls to slow AI research, which could, in turn, drag on investment.
To be clear, I see stocks recovering from any pullback and going on to produce long-term gains, as they always have. But these concerns are weighing the market down, even if the long-term story remains bullish.
That brings me to bonds, which I see becoming more attractive to investors as stocks wobble—especially corporate bonds. That’s because corporate bonds are facing a much different situation than stocks.
That story begins on the government-bond side, where, as I know I don’t have to say, we’ve seen yields rise. Last week, for example, the yield on the 10-year Treasury note hit 5%, a high not seen since 2007.
Corporate-bond yields have been pulled up with yields on government bonds, raising the prospect of higher income. Meantime, corporate America’s fundamentals are a lot different than those of Uncle Sam’s debt-burdened books.
Earnings growth, for one, remains solid, and indeed in plenty of cases record-breaking. As a result, the risk of defaults among corporate bonds is low—in my view, lower than the market thinks. That’s a plus for FSCO, in particular, because of the kind of debt the fund holds.
Source: Future Standard
Unlike many corporate bonds, which fall in price as yields rise, first-lien loans (which make up the bulk of FSCO’s portfolio) carry floating rates, something that makes them more valuable in an environment like this one, as their income streams rise.
As a result, FSCO’s market price has been rising slightly (see purple line below) in the last few months, even as the stock market has stumbled. At the same time, FSCO’s NAV (see orange line below) has more or less moved sideways.
Investors Bid Up FSCO, Narrowing Its (Still-Wide) Discount
This suggests stronger sentiment around the fund, and it’s narrowed the discount slightly. But even so, FSCO’s markdown remains around that 27% mark.
Why does this situation exist? One issue is the dividend, which was reduced a few months ago but has since seen a slight increase.
The cut was because FSCO has been suffering a hangover from last year’s private-credit worries. But private-credit valuations have now mostly recovered.
In other words, FSCO’s discount reflects 2025 sentiments, even though we’re deep into 2026—and are starting to look at what the story of next year’s market will be.
Already, we’re getting a hint of that narrative, and it’s starting to look like it will include higher bond yields, along with Fed rate hikes. But at the same time, we’re also likely to see stronger debt coverage from highly profitable firms that still have a lot of room to incorporate AI into their businesses.
And while higher interest rates do impact leverage, which FSCO uses, the fund’s ability to see its investment yields rise with interest rates also means that these higher leverage costs aren’t likely to affect net income.
That’s because the fund’s incoming investment income has been rising, even as borrowing costs go up. This is one of the perks of running a senior-loan fund in a rising-rate environment.
This is all bullish for FSCO, but the fund has another advantage, as well.
In addition to a high yield and strong historical fundamentals, FSCO is well-diversified across a variety of industries and, crucially, is not overexposed to the crowded tech sector.
As a result, we’re left with a fund whose recent history has left it looking oversold. And a 13.7% income stream (especially one that looks like it’s recovering) isn’t something that stays oversold for long.
New targets for S&P 500, earnings forecasts, rate hikes and AI
With high oil prices and borrowing costs upsetting investors, Graeme Evans explains what these Wall Street analysts think will happen to share prices in the year ahead.
15th September 2026
by Graeme Evans from interactive investor
Further upside for the S&P 500 index has been forecast after a leading bank said the start of US interest rate hikes did not automatically mean a more challenging period for stocks.
While volatility can increase around the beginning of a tightening cycle, UBS Global Wealth Management said US equities have historically been resilient after the first hike.
In its note published today, UBS said it saw no reason to alter its S&P 500 index projections for a year-end 8,100 and then 8,400 by June next year. The upsides of 6% and 10% follow last night’s close of 7,619.98, a level 11% higher so far this year but down from August’s record 7,799.
The bond market is already pricing in nearly four US rate hikes over the next year, beginning at the conclusion of the Federal Reserve’s policy meeting on Wednesday evening.
The expectations have driven the 10-year Treasury yield from 4.2% at the start of the year to 5%, which UBS said had contributed to a meaningful adjustment in the S&P 500 valuation from roughly 22 times earnings to around 19.5 times.
It added: “Put differently, the bulk of the valuation adjustment associated with Fed tightening may have already occurred.
“For long-term yields to rise materially from here and put further pressure on equity valuations, investors would likely have to price in an even more aggressive path for monetary policy, in our view.”
UBS said its analysis of 16 hiking cycles since 1954 showed an average gain one year after the first Fed hike of 10.8%.
There’s yet to be a bear market – defined as a decline of 20% or more from the recent high – although the last hiking cycle in March 2022 was the worst performing of all with a 9% reverse.
The bank said the straightforward reason why the first Fed hike is not, by itself, a reliable signal to reduce equity exposure is that a central bank typically begins raising rates because economic growth is healthy and inflation pressures are building.
It added: “Those same conditions are often supportive of corporate profits. As a result, earnings growth can continue to offset the valuation headwind created by somewhat higher interest rates.
UBS said the current outlook for economic growth, corporate earnings and inflation appeared more consistent with continued expansion than imminent contraction.
It added: “Manufacturing activity remains in expansion territory, and our previous work has shown that manufacturing upcycles tend to persist for considerably longer than the current cycle has been in place.
“Furthermore, we continue to expect strong growth in AI investment spending into at least 2027, which will drive profit growth for the ‘picks and shovels’ providers. Hyperscaler investment plans already indicate a commitment to solid growth in 2027.”
However, UBS believes that the biggest medium-term risk to the equity outlook remains the trajectory of AI infrastructure investment. Higher interest rates can increase the cost of capital and make financing massive data-centre projects more difficult.
It added: “Over time, that could place pressure on parts of the AI ecosystem. However, we believe substantially more tightening would likely be required before financing conditions become a meaningful constraint.”
For now, the bank thinks earnings growth is on a solid footing and will continue to be the main driver of further equity market gains. UBS expects S&P 500 earnings will grow by 25% in 2026 and 14% in 2027.
This compares with Bank of America’s new forecast for a current year rise of 33% to $365 a share, which represents a 6% hike on its previous estimate after Corporate America delivered another outsized earnings beat in recent second-quarter results.
The bank expects growth to decelerate in 2027 although a forecast rise of 12% to $410 is still above trend, driven by the AI investment cycle, manufacturing strength and productivity gains.
Risks include reliance on the AI buildout after noting that five stocks –
Micron Technology Inc MU, Microsoft Corp MSFT and Apple Inc AAPL – now account for a record 27% of next 12-month S&P 500 earnings.
And semiconductor stocks alone are expected to contribute over 60% of the total consensus earnings per share growth in 2027.
Although encouraged by the fundamental backdrop, it said worsening liquidity, geopolitical tensions, sticky inflation and unfavorable seasonal trends were reasons for near-term caution.
The bank yesterday nudged up its year-end target for the S&P 500 to 7,400 and launched its 12-month target at 7,800, which it said was “nothing to write home about”.
It believes there’s likely to be a better entry point, given that March has been the only time the benchmark has declined by 5% or more this year compared with the typical three per year. Contractions of 10% or more happen once per year on average, but the last was spring 2025.
BofA said about 50% of its bear market signposts are triggered, which is not as bad as 70% seen in May-June but still elevated. However, the bank adds that productivity gains mean the long-term bull case for US equities is intact.
A few more dividends for re-investment.
As we near the final quarter, the latest estimate for the income of the
SNOWBALL IS £13,200.
Some of the payments expected in December may slip into 2027.
If the SNOWBALL earned income of £13,863 it would equate to the 2033 target but it will not. £13,000 re-invested at around 8% equals another 1k of income but next years income fcast is still £12,064.00.
It’s still early to set a target for next year.
A good chart if you are building a position.
The TR chart, where you could use the high yield dividends to re-invest in the ‘safer’ dividend shares in your Snowball.
Once you have received some dividends and re-invested in your Snowball your risk level is reduced.
The SNOWBALL will most probably buy a few more after the next xd date.
When the price is above the cloud, the sun is shining on your share.
When the price is below the cloud, the market is raining on your share parade.
When the price is in the cloud, the direction of the price is the known unknown.
The current trend is in place but may be showing signs of weakening.