PIMCO High Income Fund (PHK) Stock

PIMCO High Income Fund offers a high dividend yield of 11.3%, making it attractive for income-focused investors, especially retirees seeking supplemental income. Despite a 66% price decline since inception, PHK's total return is 373%, driven by continuous high distributions, but it's not ideal for capital appreciation. PHK's dividend has consistently decreased over the last decade, and its distributions are primarily classified as ordinary dividends, which have less favorable tax consequences.

TORONTO, Oct. 08, 2024 (GLOBE NEWSWIRE) -- ThreeD Capital Inc. (“ThreeD” or the “Company”) (CSE:IDK / OTCQX:IDKFF) a Canadian-based venture capital firm focused on opportunistic investments in companies in the junior resources and disruptive technologies sectors, is pleased to announce today that it has entered into an agreement (the “Agreement”) with PHK Investments LLC (“PHK”) to provide investor relations services to the Company. Pursuant to the Agreement, the Company will pay a fixed monthly fee of £6,875 (approximately $9,356 CAD) (the "Monthly Fee") and up to £20,000 (approximately $27,218 CAD) in monthly ad spend which includes the use of third-party social media influencers and web-based platforms, if requested by the Company. Additionally, the Company will issue 100,000 stock options exercisable into common shares of ThreeD at an exercise price of $0.90 per share. Half of the options vest in six months and the remaining half vest in 12 months. The stock options will expire two years from the grant date if unexercised.

PIMCO High Income Fund specializes in income-focused assets, with a 12.00% distribution yield, outperforming peers in the Fixed-Income Multi-Sector category. Multi-sector bond funds like PIMCO High Income Fund have maintained double-digit yields despite market pricing in interest rate declines. The PHK closed-end fund has underperformed domestic bonds over the past three months, which is very disappointing.

PIMCO High Income Fund offers high yields but has a history of shrinking distributions year after year. Even reinvesting dividends doesn't seem to catch up with distribution cuts (after 2016) even if you ignore inflation. It's hard to rely on this fund for sustainable income for retirees who depend on it for their living expenses.

This article evaluates the PIMCO High Income Fund as an investment option, which is timely given the market's renewed interest in bonds and debt securities. While I am a "bond bull" right now, I see limited value in PHK as it still has a premium price and a volatile trading history. The equity market is signaling a contrarian sign that fixed-income may be a good move. But there are better ways to play it.

The PIMCO High Income Fund offers a high current yield of 11.90%, one of the highest in the market. The PHK closed-end fund has not cut its distribution despite the negative impact of rising interest rates on bond prices. The fund's portfolio is heavily invested in speculative-grade bonds, but the real risk here is that interest rates will continue to rise.

This article evaluates the PIMCO High Income Fund as an investment option, a Closed-End Fund that I've previously advised readers to avoid due to its lack of value proposition. It has come under review again due to its high distribution yield and a premium that is lower than many of its peers from PIMCO. My past advice to avoid investing in PHK has been justified so far. And after review, I maintain a Hold rating.