5 Value Funds That Yield Up to 18%

In Warren Buffett’s most recent letter to shareholders, he updated a data point that never gets old: Just how much Berkshire Hathaway (BRK.A, BRK.B) shares have outperformed the Standard & Poor’s 500-stock index.

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In Warren Buffett’s most recent letter to shareholders, he updated a data point that never gets old: Just how much Berkshire Hathaway (BRK.A (opens in new tab), BRK.B (opens in new tab)) shares have outperformed the Standard & Poor’s 500-stock index. Between 1965 and the end of 2017, the S&P 500 has put up a plenty-respectable 15,508% … but Berkshire shares have delivered an overall gain of 2,404,748%!

Yes, Buffett’s clout means he can swing some deals that regular investors can’t get, but those returns are still a resounding seal of approval for the value investing principles that the Oracle of Omaha espouses. And those principles should drive even higher returns in the future – especially if higher interest rates put heavily indebted firms at risk.

“The economic environment continues to favor corporate earnings,” says Jim Barnes, Director of Fixed Income at financial services company Bryn Mawr Trust. If earnings are threatened by higher borrowing costs, however, that could make the companies with the healthiest balance sheets and more prudent approaches much more desirable – thus, value stocks could seem even more attractive very quickly.

“Classical value investing principles are timeless, and after one of the longest bull markets in history, they are extremely important today,” says Don Wilson, CIO of Brightworth, an Atlanta-based investment company.

Closed-end funds are an excellent way to invest in a broad swath of value stocks. In addition to the ease of getting exposure to dozens or even hundreds of stocks in just one fund, many CEFs boast much higher yields than their mutual fund and exchange-traded fund counterparts. Here are five such funds that value-minded investors should consider.

Data is as of April 13, 2018. Distribution rate can be a combination of dividends, interest income, realized capital gains and return of capital, and is an annualized reflection of the most recent payout. Distribution rate is a standard measure for CEFs. Fund expenses provided by Morningstar. Click on ticker-symbol links in each slide for current share prices and more.

Michael Foster
Contributing Writer, Kiplinger.com
Michael Foster is the Lead Research Analyst for Contrarian Outlook, where he writes CEF Insider. He has written on high-income assets, dividends, closed-end funds and exchange-traded funds for a number of publications including Forbes, Bankrate and SeekingAlpha. Michael finished his PhD in 2008 and has been advising investors since 2011.