Destra Insights

February saw markets across the globe return back to the negative environment that categorized 2022. Rob provides a look back at February 2023 in the credit markets and provides some insights about where we could be going in the near term.

A frequently overlooked part of the investment landscape, this edition of the Destra Pathfinder takes a look at Qualified Dividend Income (QDI). To cover the topic, Rob Watson talks briefly with Eric Chadwick, President of Flaherty & Crumrine Incorporated about the nature of QDI and some potentially important benefits for investors.

2022 was the year that broke the 60/40 portfolio. Hear from Jake Schultz, CFA on this edition of the pathfinder where he discusses the traditional 60/40 portfolio and how it stacked up to prevailing headwinds in 2022.

The market and a lot of pundits are suggesting that the Fed may pull back to a more traditional 25 bps increase at their first meeting here in a few weeks. But even if they do pull back to a 25 basis point increase, it is still an increase. And arent rising rates supposed to be bad for bonds? Well, looking back at 2022 that certainly seemed to be the case.

2022 is in the history books and good riddance! Most of us will be happy, both personally and financially to put last year far in the rearview mirror. Record-breaking, inflation, soaring interest rates, an old-style dictator rolling tanks across Europe, and funny money crypto platforms going up in smoke; all were factors in the terrible performance of both stocks and bonds in 2022. Listen today for some more interesting insights on 2022 and a roadmap for 2023.

The cliff divers at La Quebrada Cliffs in Acapulco, dive 134 feet into a narrow rocky inlet where the waves swell to a depth of only 14 feet for roughly 5 seconds. They dive when they see rocks knowing that the water will wash in during the time it takes them to descend.

For years now, investors have been struggling with historically low interest rates and the search for yield has pushed more and more people to invest in lower quality bonds and loans – junk or high yield as it is sometimes called. But did you know that high yield bonds are not the only asset class with high yields.

Qualified dividend income is a part of the tax rule that allows certain dividends from US corporations and qualified foreign corporations to be taxed at rates lower than ordinary income rates. This may equate to substantial tax savings for investors, especially those in higher tax brackets. While QDI is often associated with common equity dividends many preferred securities issue dividends which qualify for this tax treatment as well. Historically, preferred securities have scored well on both fronts, credit quality and coupons. But certain preferred securities may have yet another potential source of value, called Qualified Dividend Income treatment or QDI.

Often, decisions about which income investments to buy come down to balancing the amount of credit risk that we might we willing to accept as an investor, against the expected yield or stream of coupons off an investment. Historically, preferred securities have scored well on both fronts, credit quality and coupons. But certain preferred securities may have yet another potential source of value, called Qualified Dividend Income treatment or “QDI”.

It’s all about the intangibles…. Innovation improves lives and typically, the capital markets reward those companies that drive innovation. As our society and economy evolve, we have changed the perception of what we appreciate, ….what we value.