Eaton Vance Enhanced Equity Income Fund II (EOS) Stock

Goldman Sachs forecasts a 3% average annual return for the S&P 500 over the next decade, making income-focused funds like EOS appealing. EOS offers a high current income with a 7.8% dividend yield, leveraging strategic selling and options to support distributions. The fund's tech-heavy portfolio, including NVIDIA, Microsoft, and Apple, may underperform in bull markets but provides downside protection.

- EMA granted clearance to advance belrestotug 400mg + dostarlimab as recommended Phase 3 dose and activate GALAXIES Lung-301 clinical sites in the EU - Interim data from inupadenant Phase 2 A2A-005 in 2L NSCLC at ESMO-IO - Completed enrollment of EOS-984 Phase 1 monotherapy dose escalation and initiated dosing of EOS-984 + pembrolizumab combination - Pro forma cash and investment balance of $683.9 million as of September 30, 2024 expected to provide runway through 2027 across a number of impactful portfolio milestones

The Eaton Vance Enhanced Equity Income Fund II is a closed-end fund that primarily invests in common stocks of high growth companies, offering high income and a high growth potential. For 19-plus years of its existence, the fund has managed a sensible distribution policy, has provided over 10% of annualized total returns, and is currently paying 8.50% in distribution income, paid monthly. We believe it deserves a place in your income portfolio; we would rate the fund as a 'hold' for existing owners and a 'buy' for new investors. However, it may be better to dollar-cost average the buys instead of lump sum.

Various estimates put the grid scale battery market at over one trillion dollars. EOS went public via a SPAC, suffered, and has come back to life with a large financing package and another large potential government loan. The chemistry used by EOS is more benign than others, non-flammable, and offers an economic longer duration discharge than other solutions.

Eaton Vance Enhanced Equity Income Fund II offers a tech-heavy portfolio while employing a covered call strategy. The fund targets a 50% overwrite of its portfolio and writes out-of-the-money calls, allowing for more potential upside participation. The fund offers a monthly distribution coming in at 8.72%, and it received a lift earlier this year to an all-time high monthly amount.

EOS was previously considered attractive due to its discount to NAV and strong performance. We had previously recommended buying the fund. The fund's discount to NAV has narrowed significantly, and technology valuations have become stretched. These factors make EOS less attractive compared to earlier in the year. A potential "great rotation" from tech to small-cap stocks could further impact EOS's performance. As investors shift focus, the fund's overweight position in technology may become a disadvantage.

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The Eaton Vance Enhanced Equity Income Fund II offers income-focused investors the opportunity to achieve their goals without sacrificing upside potential. The fund has a high yield of 8.71%, which compares favorably to yields available from broad market indices. The fund's strategy of writing call options against individual stocks in its portfolio provides a higher yield and potential for income generation.

Eaton Vance Enhanced Equity Income Fund II is a buy-write fund that utilizes call options to extract dividends from equities. EOS's 50/50 portfolio structure and 4% out-of-the-moneyness have helped it outperform other buy-write CEFs and ETFs. Despite its strong performance, EOS is trading at a -4.7% discount to NAV, making it an attractive option for tech exposure.