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3 Funds To Buy On This Pullback (7.7% Dividends, 200% Payout Growth)

Forget the trade war noise. Here’s the only thing you need to know: if you’d bulked up your stock holdings on any of the dips we’ve seen in the last four years, you’d be a lot richer today.

The reason for the market’s “one step back, two steps ahead” pattern is simple: despite the interest rate- and trade-driven terror, corporate profits and sales are rising (as are workers’ wages), and unemployment is low.

In other words, the US economy is solid—and it’s stayed solid through every short-term crisis of the last few years. So now we have another pullback that’s given us another chance to amplify our upside.

But what to buy?

You can easily get into the market with an index fund like the S&P 500 ETF , but there’s a problem: we want to have a nice stash of dividend cash to drop into stocks on the next pullback, and with SPY, your payouts are tiny, with just a 1.9% dividend yield.

Today In: Money

This is where closed-end funds (CEFs) come in.

With an average yield of 7.4%, CEFs are much bigger income producers than the index, and three CEFs are particularly appealing right now, with overhyped fears making them unusually cheap.

Let me explain.

Because CEFs’ market prices can deviate from the value of the holdings in their portfolios (called the portfolio’s net asset value, or NAV), CEFs can trade at wide discounts to their NAV—even if the funds have a long history of strong performance.

That’s exactly what we’re seeing in the three funds I’m going to show you now.

Bargain CEF Pick No. 1: Buy Like Buffett (But With 209% Payout Growth)

Let’s start with the Boulder Growth & Income Fund (BIF), whose 3.9% yield is more than double that of the average S&P 500 stock, even though it’s actually on the small side for a CEF. Plus, BIF pays out special dividends every once in a while and has been aggressively increasing its regular quarterly payout, too!

A 200% dividend-growth rate isn’t something you see every day, but BIF can do it because it focuses on stocks whose bargain valuations set them up to outperform over the long haul. It then returns those gains to you in cash.

To get that type of performance, it follows the teachings of the master—Warren Buffett.

In fact, a third of the fund is in Berkshire Hathaway (BRK.A, BRK.B), so owning BIF is like getting Buffett’s portfolio at a big discount, as BIF trades 16.8% below its NAV. That makes it the third-most discounted CEF I track through our CEF Insider service.

Beyond Berkshire, BIF holds companies with strong cash flows that Buffett has also bought: names like JPMorgan (JPM), Cisco (CSCO) and Wells Fargo (WFC). These firms can withstand an economic slowdown because of their strong balance sheets.

Bargain CEF No. 2: A 9% Dividend Disguised as 1%

General American Investors (GAM) also goes after bargain stocks, plus the fund is a bargain itself at a 14.5% discount to NAV. GAM is what I call a “stealth yielder”: while its normal dividend (paid annually) yields about 1%, the fund gives you the bulk of your cash through a big special dividend in December.

These special payouts are a big deal: they gave GAM an annualized yield of more than 9% last year, and a similar yield is likely in November, when the fund will announce its end-of-year payout.

What about the portfolio?

GAM, like BIF, is a value-focused fund, zeroing in on firms with strong cash flows, like Microsoft (MSFT), Alphabet (GOOGL) and Republic Services (RSG). That gives it a mix of high-performing tech stocks and stable cash generators from other sectors. This balanced approach is how GAM has been returned so much cash to shareholders over the years.

Bargain CEF No. 3: A Huge 7.7% Dividend Paid Upfront

The Nuveen Tax-Advantaged Dividend Growth Fund (JTD) takes a similar approach as BIF and GAM, but its “regular” dividend yields an outsized 7.7%, so you don’t have to wait for dividend hikes or special payouts to get your big yield here.

Plus, JTD trades at a 2.3% discount that, while smaller than those of GAM and BIF, is still far too big, given what the fund does.

JTD’s diverse portfolio ranges from Honeywell International (HON) to SAP (SAP), UnitedHealth Group (UNH) and AT&T (T). It also includes some tech, such as Microsoft (MSFT). The fund’s global approach helps it find bargain-priced companies with entrenched client bases and stable revenues.

That’s why JTD has been crushing the market for a decade. And here’s the best part: only a few people know. If you look at the market-price movement for JTD, it seems pretty ho-hum.

However, add in JTD’s big payouts and the chart looks much better!

Not only has JTD soared over the last decade, it has also beaten the index, with a huge chunk of its return in cash, to boot. That means this fund shouldn’t trade at a discount at all—but the fact that it does means it’s certainly worth your attention now.

Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report “Indestructible Income: 5 Bargain Funds with Safe 8.5% Dividends.”

Disclosure: none

I have worked as an equity analyst for a decade, focusing on fundamental analysis of businesses and portfolio allocation strategies. My reports are widely read by analysts and portfolio managers at some of the largest hedge funds and investment banks in the world, with trillions of dollars in assets under management. Michael has been traveling the world since 1999 and has no plans to stop. So far, he’s lived in NYC, Hong Kong, London, Los Angeles, Seoul, Bangkok, Tokyo, and Kuala Lumpur. He received his Ph.D. in 2008 and continues to offer consulting services to institutional investors and ultra high net worth individuals.

Source: 3 Funds To Buy On This Pullback (7.7% Dividends, 200% Payout Growth)

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Source: How Islamic Finance Could Save the Planet

Patient Engagement Is The Key To Bundled Payment Success

patient engagement

Over the last decade, the Center for Medicare and Medicaid Services (CMS) has created both mandatory and voluntary programs designed to move healthcare providers from fee-for-service payment models to those that are value-based. Some of the most well-known programs are bundled payments.

Bundled payments have proven challenging for providers to address, as oftentimes they are unsure where or how to start. The shift towards value-based programs like BPCI (voluntary bundled payment program) and CJR (mandatory bundled payment program) have become a dividing issue amongst healthcare executives as some doubt the programs will drive desired success. More often than not, forward-thinking and progressive providers are already positioning themselves for the future by putting into place the right processes and structures for success.

Common Challenges in Succeeding Under Bundled Payment Programs
The purpose of bundled payments is to promote high-quality care, and the system is meant to reward providers that care for patients during the entire care episode at a predetermined cost. Conversely, if a provider goes over the predetermined budget or target price, it is required to pay the difference back to CMS.

The challenge for providers is that bundled payments require more coordination that is tailored to individual patient preferences than traditional fee-for-service models. Scaling this type of care management is typically a new process that will require better reporting, communication, and engagement workflows. Additionally, many providers do not have consistent processes around communicating with patients prior to their arrival or after they have left the facility.

By capitating episode-based payments, providers across the care continuum must work more closely together to understand and act upon patient needs. From gathering patient outcomes information at the physician office to proactive rounds in a rehab facility, if processes are not efficient and systems don’t communicate with each other, there is a greater risk of poor patient outcomes and of losing money. So, the question is, how can healthcare providers realize success under bundled payments? The answer lies in creating efficient and consistent patient engagement programs.

Utilizing Patient Engagement Strategies to Maximize Bundled Payment Rewards

As with any value-based initiative, involving patients in their care is critical to success. This is especially true of bundled payments. Under most CJR and BPCI models, providers are accountable for the patient for the entire care episode, which can include up to 90-days post-discharge. To ensure success, patients should be engaged prior to their scheduled appointment, educated while in the facility, and contacted throughout their recovery.

With proactive engagement strategies such as pre-op education and post-op follow up, providers can identify and prevent potentially costly events such as an infection or a readmission. There are many engagement strategies that can help providers achieve bundled payment goals and KPIs. For example, programs like CJR require providers to collect patient-reported outcomes. To do this, providers can implement kiosks at physician offices or they can proactively reach out to patients via call or text to capture the information. Additionally, clinical follow-up calls or wearable fitness trackers can be used to monitor patients post-discharge and determine if patients are experiencing any issues.

To further engage patients in the hospital or post-acute healthcare facility, rounds are a great way to track progress and leverage best practices such as teach-back to help prepare patients for their transition home and recovery. The bottom line is that there are countless interaction points where providers can engage patients in their own care to lower costs, improve outcomes, and enhance experiences.

Achieving Success with Bundled Payments
Whether you are a believer in bundled payments or a vocal skeptic, putting the right processes and technologies in place to drive patient engagement is proving to have a positive impact. Several hospitals in the U.S. are already meeting bundled program KPIs (key performance indicators) such as reduced readmissions with effective patient engagement and scalable patient engagement processes are what can drive long-term success.

The hospitals leverage the patient information they have to deploy automated calls and text messages, cross-continuum care management, and point-of-care data collection. By using technology, the team is able to leverage one orthopedic care coordinator to manage the day-to-day workflow associated with all total hip and knee replacement patient episodes.

By implementing patient engagement processes that leverage technology for efficiency, providers are creating a better experience throughout the entire care episode, all while reducing the overall cost of care. It is evident that risk-based models are here to stay with the launch of new programs such are BPCI Advanced, which is set to go live this year. As CMS and commercial payers continue to leverage value-based payments, patient engagement will play a critical role in improving quality and driving financial success.

Photo: mathisworks, Getty Images

This post appears through the MedCity News MedCitizens program. Anyone can publish their perspective on business and innovation in healthcare on MedCity News through MedCitizens. Click here to find out how.

 

By:

John Banks Powell

John Banks Powell is the Vice President of Post-Acute Strategy at CipherHealth. Powell spearheads CipherHealth’s post-acute and bundled payment initiatives by partnering with providers across the care continuum who leverage CipherHealth’s patient engagement and care coordination solutions to meet quality initiatives. Powell holds a BA from the University of North Carolina at Chapel Hill, and a Masters degree from the Fuqua School of Business at Duke University.

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