Dynamic Duo Crushes the Market With a 12.9% Income Yield

When the best of the best join forces, exceptional things frequently happen.
For example, Lennon & McCartney, Rogers & Hammerstein, Buffett & Munger have all produced exceptional things.
I offer another example of a similar dynamic pairing.
Two of the best investment management teams recently joined forces. And an exceptional thing happened for income investors – an income yield approaching 13%.
Most of us would agree that a 13% income yield is exceptional. The yield is nearly double that offered by other investments of its kind. It’s seven times the dividend yield of the S&P 500.
Who are the mysterious yield-generating caped crusaders?
One is RiverNorth Capital. DoubleLine Capital is the other.
Each is the recognized expert in its respective market niche.
RiverNorth is the premier institutional investor in closed-end funds (CEFs).
The company was founded in 2000 to manage $100 million in initial capital. That stake has grown to $3.7 billion through a series of wealth-perpetuating investments.
RiverNorth Capital’s modus is simple enough: invest and force change, and ensure change occurs sooner than later.
Woe to the laggard. If a target fails to move sufficiently fast on creating value, RiverNorth will up its stake. The initial recommendations are then elevated to demands.
This strategy has been used repeatedly with much success in the CEF realm to create wealth.
DoubleLine Capital is more reserved. Buy-and-hold is the preferred approach.
DoubleLine is the premier bond- and debt-investing firm in the world. The company was founded in 2009 by Jeffrey Gundlach with $12 billion of assets under management. Through astute investing, that corpus has swelled to $110 billion.
You may recognize the name. Gundlach is a fixed-income celebrity. Barron’s labels him the new bond king. Bloomberg Markets rates him as one of the “50 most inferential” market commentators.
RiverNorth and DoubleLine joined forces in 2016 to open their own CEF – the RiverNorth/DoubleLine Strategic Income Fund (NYSE: OPP).
The RiverNorth/DoubleLine CEF combines two investment strategies: one is tactical, the other opportunistic.
RiverNorth manages the tactical side. The money is invested in CEFs, BDCs, and ETFs.
But CEFs dominate. They’re an investment class where RiverNorth shines. A CEF can sell at a steep discount to net asset value (NAV). RiverNorth’s management team is renowned for buying low (at a discount) and selling high (at a premium).
The opportunistic side, under the purview of DoubleLine, is the more conservative of the two. It invests primarily in agency and non-agency residential mortgage-backed securities (MBS) and commercial mortgage-backed securities (CMBS).
RiverNorth and DoubleLine joined forces for one purpose – to generate exceptional income for its investors. No one can argue they’ve failed in their mission.
Distributions are paid to investors in monthly installments. What’s been paid each month has risen over time. The monthly distribution has risen to $0.1833 per share. That’s $2.20 per year.
The distribution generates a market-crushing 12.9% yield on investment.

I noted that a CEF can trade at a discount to NAV. As exceptional as the management team may be, the RiverNorth/DoubleLine CEF trades at a 5% discount to NAV.
In essence, you have the opportunity to pay 95 cents for a dollar’s worth of assets. You get the dynamic duo at a discount.
Better yet, you get an 12.9% income yield that few investments of its kind can match.

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