@Ted,
I am a subscriber of FTR. This was as a result of a service vacuum left when AT&T (U-verse) folded in CT.
I have taken an interest in following this stock when you first mentioned you bought it earlier this year. I have also watched this stock tumble over the last year. At what point, do you as an investor, worry about the dividend being impacted by the company share price? One would have to go back to the 1980's to find a comparative share price to today's $3.42. Also, the dividend trend since 2005 has decreased from .25/share to .10/share.
How do you, as an investor, deal with what I would call the "sour cream stage" of a stock like FTR? What I mean here is, how does an investor endure a 30% drop in share price (I believe you bought this first at about $5/share)? Seems more like a drying up of the mammary gland (mother's milk) to me.
Has the stock become an even more incredible buy than it was when you first bought it?
I will say collecting a dividend does help an investor be patient, but does an extended drop in share price curdle that milk?
Your thoughts?

@MFO Members; The Linkster believes that dividends are the mother's milk of investing. For what its worth here is a current list of my dividend portfolio, and current yields.
Regards,
Ted
Bonds:
Navistar 8.25% 11/21 Callable 2017
Preferred Stocks:
ALLY-A: 8.125%
ARI-A: 8.33%
CIM-A: 8.96%
DDT: 7.50%
MLP's:
BX: 6.13%
KKR: 3.98%
Common Stocks:
CSAL: 9.04%: (Tax free spin-off of WIN)
CTL: 8.98%
FTR: 12.28%
NLY: 11.65%
NI: 2.96%
PFE: 3.94%
T: 4.59%
VZ: 4.30%
WIN: 7.62%

I continue to be a fan of low volatility investing, and the low volatility/high dividend ETF, SPHD, continues to work. This ETF has done reasonably well since the TLT peaked on 7/8/2016, and has outperformed the S&P 500 since its inception.
CHART
Kevin

I thought it might be worthwhile to link to a couple of objective family rankings. Use them as you will - as evidence that families are worse (or better) than their reputations, or as a source for those reputations.
MFO: "How Good Is Your Fund Family" 2016 Edition
WSJ/Barron's: One, Five, and Ten Year Rankings, through end of 2015, plus methodology (Lipper)
              Best Fund Families of 2015 (adds category rankings, e.g. domestic equity, taxable bond)
I agree with hank that bigger is not always better. But it does increase the odds of finding a good fund among the also rans in a family. Hence Fidelity winds up well represented on many "best funds" lists by sheer size. Such lists are not family rankings and don't address family reputation.

Calamos - great selection. A boutique firm that built its reputation on a niche product (convertibles).
TEMWX - NTF at Fidelity (to address a concern with FT loads).
Another overrated family - Dimensional (DFA). Excellent for small cap value (domestic or international), less so outside of its wheelhouse. Its major advantage there (low cost) is impaired by its general requirement to invest through advisers. (Though there are more and more ways to circumvent this now, including 529 plans and VAs.)

Intriguing Question.
My experience only encompasses about 10 families. Can give only give a very limited perspective.
My nomination for most overrated: is Calamos. 15 years ago when I decided to invest with them, reviews from many reputable sites suggested they were top-notch. Could damn near walk on water - especially during tough markets. That was not my experience after a decade and I abandoned them.
My nomination for underrated: Oakmark: While overall reviews of OAKBX have been good, it's taken considerable flack, including here, for lagging benchmarks and peers. I've always felt this was a tough fund to benchmark. These are deep value long-term focused investors who try to avoid currently hot stocks and sectors. They'll buy things that are unpopular with the crowd and slowly build a position. They'd rather sell early than eat a big loss. So they abandoned long term bonds a few years too early which hurt them relative to peers. I don't fully understand their hedging strategy designed to protect against big losses. But it seems to depend on certain components like smaller energy producers, big defense contractors, financials, beaten down large caps, and, when appropriate, government bonds.
Re: Franklin Templeton (nominated by rforno): My first and only fund for the first 20 years was TEMWX. During the 70s, 80s and most of the 90s these guys seemed to have a license to print money. I and several coworkers did very well by them. So it's with sadness that I observe that fund's lackluster performance over the past decade or more. I don't know what happened to a once very fine company.
Clip from Wikepedia (the Free Encyclopedia) on their rapid expansion through acquisition and merger beginning in '92. Might have contributed to their problems:
"In October 1992, Franklin acquired Templeton, Galbraith & Hansberger Ltd. for a reported cost of $913 million, leading to the common name Franklin Templeton. Mutual fund pioneer Sir John Templeton was the owner of Templeton, Galbraith & Hansberger Ltd together with his son Dr. John Templeton and John Galbraith who together owned 70% of the firm. In November 1996, Heine Securities Corporation, known for the Mutual Series of funds, merged into the Franklin Templeton complex. In October 2000, Franklin acquired Bissett Funds to increase its Canadian presence, and Bissett remains a key brand from Franklin in the Canadian market. The Fiduciary Trust Company was acquired by Franklin Templeton in April 2001."

High Yield Continues Near Ytd Highs
Artisan ARTFX Nov 30 Commentary
In an environment characterized most notably by extraordinarily low yields, it has been our view that the non-investment grade market offers a better risk/reward proposition than most areas of fixed income. This month exemplified the substantial interest rate risk that resides in some of the lowest-yielding parts of the market.
Portfolio Composition (% of total portfolio)
Corporate Bonds 75.2
Bank Loans 19.7
Equities 0.6
Cash and Equivalents 4.5
https://www.artisanpartners.com/content/dam/documents/monthly-commentary/vr/2016/nov/ARTFX-APDFX-MCommentary-1116-vR.p
Henderson High Yield Opps HYOAX
November 30th
Corporate Bonds 87.8 %
Bank Loans 6.2 %
Cash 4.9 %
Low Global Gov'nt Bond Yields continue to drive strong demand for HY and leveraged loans.Effort to add risk to portfolio but liquidity challenges and fewer new issues in the lower quality space has been a hindrance.
https://az768132.vo.msecnd.net/documents/22438_2016_12_21_08_33_38_483.gzip.pdf
As of November 30, 2016 Barings U.S. High Yield Fund BXHAXCorporate fundamentals outside of commodities have remained stable recently making high yield returns attractive relative to other income producing investments http://www.barings.com/assets/user/media/Barings-US-High-Yield-Fund-Factsheet.pdf
M* High Yield Returns
http://news.morningstar.com/fund-category-returns/high-yield-bond/$FOCA$HY.aspx
Related
Bank loan funds back in favor
Dec. 23, 2016 2:24 PM ET|By: Stephen Alpher, SeekingAlpha News Editor
Bank loan funds (also known as senior loans or leveraged loans) have seen $5.6B of net inflows this year, with a nice chunk of that coming in the weeks since the election, writes Chris Dieterich at the WSJ.
It's no secret why: First, investors view bank loans as lower risk than junk bonds as they're ahead in the corporate structure in the event of a default. Maybe more importantly given the current environment, these loans are floating rate, making them popular in times of rising interest rates.
http://seekingalpha.com/news/3232452-bank-loan-funds-back-favor

I couldn't find a previous MFO topic link on this (I believe linked by @Ted), but here it is from the horse's mouth (or the other end if this strategy doesn't work out):
https://researchaffiliates.com/documents/586-The-Emerging-Markets-Hat-Trick.pdf

I am sorry to hear about your health. There are lots of good suggestions already. My 2 cents. I think it is possible to put together a 4% yielding portfolio without stretching. An early retiree usually needs to have more equities to get a little growth to make sure you don't outlive your money and to provide inflation protection. Think definitely more than 50%. If you can offer up how many years we should plan for it will be easier to offer an allocation suggestion as some early retirees will want 75% stocks. If you have an interest in managing it yourself, I'd recommend some individual issues to complement some funds. Here's an example that is 50/50 stock bonds that will yield about 4.2%:
Individual stocks (with 4% in each):
SO
WEC
JNJ
PG
MMM
UL
REIT's (with 4% in each)::
WPC
O
HCN
Utility ETF (with 4% allocation):
XLU
Baby Bonds (held to maturity; with 4% in each):
CCV
GEH
Preferred Stocks (with 4% in each):
PSA.T
NNN-E
Open Ended Mutual Funds:
TILDX (with a 4% allocation)
AVEDX (with a 4% allocation)
FFRHX (with a 14% allocation)
Vanguard intermediate term bond ETF BIV with a 14% allocation
CEF's (with a 4% allocation to each):
ETB
NSL
(Note, I am long many of these.)

@Zoneblitz More Options and Homework Nice table in SA article
BDC Buzz, from Seeking Alpha
Dividend investing, high income, BDCs, portfolio strategy
Baby Bonds for business development companies are finally starting to deliver attractive yields to investors.
Most of these bonds have maturities of 2-7 years and offer stable yields of around 7%.
I am expecting higher yields in the coming weeks and will likely be making purchases.
http://seekingalpha.com/article/4025080-rising-yields-bdc-baby-bonds
As mentioned by @Edmond. Good source for research and tax status of interest/dividends
http://www.quantumonline.com/search.cfm

Hi Crash. This is a stimulating topic which I find very interesting. But rarely if ever do I attempt to forecast where markets will go. I've been surprised too many times in the past to trust my instincts in that regard. What I do try to do (sometimes successfully) is add or remove risk in the portfolio by raising or lowering my cash and short duration bond position. On that score, I'm not bullish now - but not bearish either. Have been pretty much sitting on my hands with a slightly elevated cash/short bond position for several months. (It wouldn't take much more of this market rally to convince me to raise that a bit higher).
Re: RPIHX - Like you I'm locked out of PRHYX. But I'm not eager to own high yield now anyway. Mark Vaselkiv who has run the very successful RPHYX for many years is co-manager of RPIHX. So that's good. If I wanted a substitute for PRHYX, I'd probably buy it trusting in Vaselkiv and T. Rowe's management in general. But I think everyone looking at high yield now needs to realize that these securities tend to have risk characteristics typical of both bonds and equities. In the case of very low grade junk bonds, the risks are even more closely aligned with equities. Be very worried about these if the stock market takes a deep dive. They're not imune to carnage.
Re RPSIX (which you don't like): I like it as a stabilizing influence in my portfolio. You are correct that it's not a bond fund. It's multi-sector Income, even holding 12% + - in their Equity Income stock fund.
"Do I need a U.S. domestic core-plus bond fund, after all?" - Heavens no. I've never felt that need. That's been especially true the past 5 or 10 years with 10-year Treasuries yielding under 5%. That's not to say bonds can't serve a purpose in many portfolios. But it depends on your other holdings and your style. Does everyone need a dedicated bond fund? No.

Thanks, guys. The portf. is spread out like this: 44% US equities, 8% foreign equities. 39% bonds, and 2% "other", probably convertibles and shorts.
> Yes, there's a big amount in my two balanced funds: 35.48% in PRWCX and 16.02% in MAPOX, which I'm deliberately growing.
>Among equities: 14% small-cap. 23% mid-cap. 62% large-cap.
>PREMX is 14.14% of portfolio. The monthly dividend is over $100.00, now. Being re-invested.
PRSNX: 10.54% of portf. Divs are re-invested.
DLFNX = 2.51%, as mentioned above. Divs reinvested, but it's just $8.00/month or so. And the share price is up against a wall.
I'm already at my own personal limit in terms of the number of funds owned. I must shed one if I'm going to add one. Here are the others: MSCFX SFGIX TRGRX PRIDX and PRDSX. My wife's 403b fund is in the overall mix, too: VSCIX. Still just 1.94% of the Big Picture. I do not like to make frequent TACTICAL movements. I want to keep it stodgy, but PRODUCTIVE. ...@Ted mentioned that 5% is his lower limit. I could simply add to DLFNX to get to 5%, and that's not a radical decision.
But bonds will only be paying me to "wait for the next time it comes around on the guitar." (Arlo Guthrie.) We are in for a protracted cold-spell for bonds.
@JohnChisum: yes, I've crossed a threshold with TRP and can use PREMIUM tools at Morningstar. They also tell me I can use a dedicated phone line for those who hold more than X dollars with them.
@MikeM: If I grow DLFNX for stability, then 5% of portf. would be more stable, I suppose, than 2.51%, eh? Glad for the replies. But why would EM bonds be advantageous, right now, JohnChisum? I won't be adding any more to my current EM stake. And PRSNX has not been bad to me. It's "global" bonds, but does not include EM.

Thanks @Junkster
Day after your post of 12/04 bought a cef loan fund TSLF.
http://fwcapitaladvisors.com/wp-content/uploads/2016/12/TSLF_Brochure_2016_Q3.pdf
Also own RIMOX Mix of Hi-Yield/Bank Loans /Alts in EM/Euro/Domestic http://www.citynationalrochdalefunds.com/Content/pdfs/2016/8427/FIOF Portfolio Holdings by Sub-Adviser Nov 30 v1 12-07-16.pdf
I would sure like to know the whos that are so down on bank loans.
Gundlach's webby If you must own fixed inc.-floating rates
Note to @Crash Gundlach's Dec webby: Trump not good for Bond prices.DBLTX always a lower duration than AGG makes the fund a good choice in a rising interest environment.
Bond Market Fascinations: An Interview
Acropolis Investment Management LLCPosted on December 19, 2016 by David Ott
I..don’t think that the shift in rates is entirely explained by the election. The other factors include a reversal of the ‘fear trade,’ which has been going on for years where investors flock to safer assets such as US Treasury bonds to avoid uncertainty. This, along with central bank policies, took yields around the world into negative territory and it came to a paramount this summer with the uncertainty surrounding the Brexit vote.
Over the summer, you can see that everything was locked up and that there was a lot of sideways movement. Once the election hit, yields just broke free. And, of course, the Fed reducing monetary stimulus is a part of it too.
In the short-term, you could see spikes, but I’m not sure that the economy can take substantially higher interest rates. There’s research now that shows that if the yield on the 10-year Treasury gets up to 2.65 or 2.75 percent that it would negatively affect the economy.
I wrote an article for ALM Insights about the debt level in our country (that you can read by clicking here: the article starts on page six). The last time the Fed was raising short-term interest rates in 2004, the total-debt-to-GDP was 180 percent.
When you look at public and private balance sheets today, we’re almost at 260 percent, meaning that our total debt, both public and private, are much higher relative to the size of our economy. Small changes in interest rates will be magnified today because the economy is more tied to borrowing costs. It’s like anything with leverage.The Fed’s forecast for next year that just came out last week calls for three hikes to the overnight rate. They’re the most aggressive forecaster in the market right now – the market only thinks that there is one or two more coming.
The Fed has consistently had much greater expectations than the market. This time last year, they projected four increases and we got one. The year before that, they said four and we got zero. Their track record is not very good.
I like (the) old argument that moving bond duration around is akin to trying to time the stock market since duration is essentially the main beta for bonds. Forecasting changes in interest rates is an impossible task.(we try )not to gamble on the direction that rates will move next.
http://acrinv.com/bond-market-fascinations-interview/

A good suggestion. Since I've been pointing out risks, some of the risks in individual bonds include:
- issue selection - lack of diversification. The most aggressive rules of thumb I've read are that one should have at least $50K (muni) or $100K (corporate), so that one can own bonds from at least 10 different issuers. Here's Fidelity's page recommending a $100K-$200K min, depending on type of bonds.
- inflation risk - locking in a fixed rate of return for many years, even if inflation rises. (WF - CUSIP 94974BFY1 - is 10 year, noncallable)
Nominal interest rate is not a risk, because by hypothesis one is accepting a 4% total return (holding to maturity), regardless of how high market rates go.
Note that the ARES bond (CUSIP 04010LAR4) is a discount bond, so while its total return is about 4.4%, its current yield is about 3.75%, based on a coupon of 3.625 and a current price of about 96.5. The rest of the yield come from the price rising to par (similar to a zero coupon bond, with similar tax treatment).
Nice sampling of bonds with different attributes.
I like the idea of a build-your-own portfolio. It does take a substantial commitment to make it work.

If goal really is 4%, what about individual investment grade corporate bonds ?
WELLS FARGO CO MTN BE 4.10000% 06/03/2026 FR ... yield to worst 4.047%
ARES CAP CORP NOTE CALL MAKE WHOLE3.62500% 01/19/2022 ... yield to worst 4.391%
Are couple examples ... c

ZB, I think your initial choices (VWINX, etc) are all fine/good candidates.
You may also wish to consider, for some, limited portion of your portfolio, closed-end funds. CEFs are focused on delivering what you stated was your goal: income. Right now -- year-end -- may be a good time to identify/take positions in CEFs. Generally, any current CEF holders who are "underwater", sell out late in the year. That surfeit of selling generally abates come the new year -- sometimes leading to price appreciation or at least stabilization.
Specifically, muni-CEFs and preferred CEFs have declined and 'may' offer value. Muni income is of course tax-free. Most preferreds -- generally those NOT issued by REITs -- offer favorable (lower) tax treatment than bond income.
Purchasing individual preferreds might also be an option, especially in light of their recent sell-offs. 6% yields are now available at/near/below par, in many cases from VERY credit-worthy issuers. The downside is their prices are subject to interest-rate risk -- which generally will NOT impact the issuer's ability to pay their preferred coupon.
dividendyieldhunter.com and quantumonline are both good resources for identifying income vehicles.
I generally limit CEFs and pfds to an overall 20% of my portfolio -- and I do trade (rather than hold them) --- so that for some periods of time, I will hold none. The price swings generally make them conducive to pruning positions when prices get too rich. Presently, I've approximately 15% in CEFs, all from recent (post-election) purchases.
Good luck.

Thank you for this. I researched many cefs/pfds last night and think your approach makes a lot of sense.

@Crash: I recommend 5% for any single investment to be meaningful.
Regards,
Ted

At 2 1/2% of total portfolio, I don't think it will change anything if moving from one Total Return bond fund to another. If Total Return funds drop say 10% next year, that only moves your portfolio 0.25%. Do you need a domestic core bond fund. Certainly not for growth, but it probably adds stability to the portfolio. But your portfolio may already have a good mix of bonds since I believe you own a couple good balanced funds.
For myself, I've been following the trends, both real and speculative. As you said, the changing environment is predicted interest rate increases. I've moved more into TIPS which so far have dragged and into Floating Rate Bank Loan funds which are doing great. PFIDX is a Pimco fund I'm using in this environment.

2.51% is not much of your portfolio. Do you have 97.5% in equities?
I think in general bonds are going to struggle for the foreseeable future. Rising rates are guaranteed per Janet Yellen. With that said, there are some good places to check out in the fixed income arena. EM bonds, inflation adjusted bonds are two to look at.
It sounds like you might have six figure in TRP. Does that give you any preference or perks?