Eaton Vance Enhance Equity Income Fund II

EOS

Market cap $1.2B

The rebound that began in April on stock markets around the world is leading to a positive double-digit year-end close for Wall Street. This increase has been partially reflected in my portfolio, which focuses on high-dividend securities, showing a gain of more than 6% against the cost basis. In addition, there has been a recent flurry of positive news regarding various special year-end distributions announced by several funds in my portfolio.

The article presents a rigorously screened list of 10 top closed-end funds, or CEFs, for income investors, offering an average 9.25% yield and -7.5% NAV discount. Selections emphasize sector diversification, long-term outperformance, sustainable distributions, and attractive valuations, with a focus on both equity and credit-oriented CEFs. CEFs are generally characterized by higher volatility and deeper drawdowns than the broader market. For these reasons, they are not suited for everyone.

November presented a pullback primarily in the mega-cap tech, but one that was fairly shallow with a recovery toward the month's end. With that said, there were some opportunities presented with the added volatility for the month. I add to my closed-end fund portfolio positions to help generate a long-term cash flow snowball that increases every month.

This month's top 10 closed-end funds (CEFs) offer an average yield of 9.5% and strong long-term performance across diverse asset classes. For income investors, closed-end funds remain an attractive investment class that covers various asset classes and promises high distributions and reasonable total returns. Closed-end funds, or CEFs, are generally characterized by higher volatility and deeper drawdowns than the broader market. For these reasons, they are not suited for everyone.

Eaton Vance Enhanced Equity Income II has seen its discount open to a relatively rare 8%+ discount, creating an attractive entry point for long-term investors. However, consider that EOS is heavily concentrated in tech, especially the Magnificent 7, making it sensitive to ongoing market volatility and sector pullbacks. The fund's distribution yield is 8.41%, with a modest NAV rate that would suggest no cut necessary, unless we see a deeper and more prolonged sell-off.

Eaton Vance's top taxable closed-end funds offer attractive yields, discounts to NAV, and strong long-term returns, making them appealing for income-focused investors. Current market volatility has widened discounts to NAV, creating buying opportunities which I highlight in the article. I prioritize funds trading at an 8%+ yield and significant NAV discounts, with a preference for those using tax-advantaged strategies and diversified asset mixes.

Eaton Vance Enhanced Equity Income Fund II offers high monthly income and long-term NAV growth, focusing on large-cap technology stocks. For 20-plus years of its existence, the EOS closed-end fund has managed a sensible distribution policy, has provided over 10% of annualized total returns, and is currently paying nearly 8% in distribution income, paid monthly. We believe EOS is an attractive fund for income investors. With the broader market near all-time highs, the fund is a bit expensive, and the yield is at the lower end of its range. We would rate the EOS fund as a Hold for existing owners. However, for new buyers, it may be better to dollar-cost-average the buys instead of a lump sum.

This month's top 10 closed-end funds offer an average yield of 9.25% and strong long-term performance across diverse asset classes. For income investors, closed-end funds remain an attractive investment class that covers various asset classes and promises high distributions and reasonable total returns. Closed-end funds, or CEFs, are generally characterized by higher volatility and deeper drawdowns than the broader market. For these reasons, they are not suited for everyone.

Eaton Vance Enhanced Equity Income Fund II offers retirees a high, tax-efficient 7.6% yield with monthly distributions and exposure to quality equities. EOS trades at a 2.1% discount to NAV, making it attractively valued for long-term, income-focused investors seeking a buy-and-hold strategy. The fund's option-writing strategy supports strong payouts but caps upside, leading to underperformance versus index ETFs like SPY during bull markets.

For those who adopt a dividend strategy, having a “thermometer” with which to measure the real performance of our stocks is an immense advantage. This thermometer is NAV, a simple line on a graph that anyone can observe and understand without the need for calculations or interpretations. If it grows over the years, it means that the security earned its distributions: if it goes down, it means that it paid them at the expense of NAV.