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Are Closed-End Funds a Big Bargain?

Closed-end funds aren't the best-known investments in the market, but they often come at discount prices compared to the value of their underlying holdings. Does that make closed-ends bargain opportunities?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at closed-end funds and whether discounted shares are bargains. Dan looks closely at Adams Express (NYSE: ADX  ) and Petroleum & Resources (NYSE: PEO  ) , two closed-ends that perennially trade at discounts to their net asset value. Dan notes that Adams Express gives investors cheap exposure to Apple (NASDAQ: AAPL  ) and other lucrative dividend-paying stocks, while Petroleum & Resources focuses on energy investment ExxonMobil (NYSE: XOM  ) , Chevron (NYSE: CVX  ) , and other high-income stocks in the energy sector. Dan runs through the pros and cons of the discounts, noting that the best of all worlds would be to buy at a discount but sell at no discount.

Why focusing on dividends makes sense
Getting discounts on dividend stocks is usually a smart move, because one of the dirty secrets that few finance professionals will openly admit is that dividend stocks as a group handily outperform their non-dividend-paying brethren. The reasons are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 28, 2014, at 2:55 PM, dudleigh wrote:

    THE STOCK HAS BEEN AROUND FOR ABOUT 50 YEARS. IT PAYS ABOUT 7 PERCENT. CAPLINGER LOOKS AT ADAMS AND PEO TOGETHER WHICH IS THE WAY TO LOOK AT IT

    DUDLEIGH

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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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9/1/2015 4:00 PM
AAPL $107.96 Down -4.80 -4.26%
Apple CAPS Rating: ****
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Adams Express Comp… CAPS Rating: **
CVX $78.19 Down -2.80 -3.46%
Chevron CAPS Rating: ****
PEO $19.29 Down -0.53 -2.67%
Petroleum & Resour… CAPS Rating: *****
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