Two Closed End Funds Have Yields Over 20%, But Only One Is Actually Safe To Own Right Now

1 week ago 7

Austin Smith

Tue, March 17, 2026 astatine 9:36 AM CDT 4 min read

Eagle Point Credit (ECC) chopped its monthly organisation 57% from $0.14 to $0.06 starting April 2026 and shares person fallen 43% implicit the past year, signaling that its 40% header output reflects a collapsed stock terms not sustainable income from its CLO equity investments. Gabelli Multimedia Trust (GGT) shifted from quarterly to monthly distributions successful mid-2025 portion maintaining astir equivalent yearly payouts, and shares are up 7% implicit 12 months, suggesting its 20% output rests connected much unchangeable footing than ECC’s distressed structure.
Eagle Point Credit faces accelerating losses due to the fact that its CLO equity positions sorb defaults archetypal erstwhile recognition conditions deteriorate, portion Gabelli Multimedia Trust’s leveraged media and telecom holdings person weathered caller marketplace accent without triggering the aforesaid organisation compression.
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A 40% output sounds similar a gift. A 20% output sounds astir arsenic good. But with Eagle Point Credit (NYSE:ECC) and Gabelli Multimedia Trust (NYSE:GGT), the archetypal question immoderate income capitalist should inquire is: wherever is that wealth really coming from?

Eagle Point Credit invests successful the equity tranches of collateralized indebtedness obligations, oregon CLOs. These are the riskiest slices of a operation that pools leveraged firm loans. When the loans perform, CLO equity holders cod excess currency flow. When recognition conditions deteriorate, they sorb losses first.

The fund's organisation past tells the existent story. Monthly payments held astatine $0.14 passim 2025, past dropped to $0.06 starting April 2026, a 57% chopped declared connected February 17, 2026. That follows a anterior step-down from $0.16 per period successful 2023 and 2024 to $0.14 successful 2025. The absorption is unmistakable.

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Price show confirms the stress. ECC shares person fallen 43% implicit the past year, dropping from $6.29 to $3.57. Year-to-date, the money is down 32%. That benignant of terms erosion means investors collecting a precocious output are simultaneously watching their main shrink. The nett effect is simply a loss, not income.

The macro situation adds pressure. Elevated marketplace accent historically widens recognition spreads and pushes indebtedness default rates higher. For CLO equity holders similar ECC investors, that dynamic is peculiarly damaging due to the fact that the equity tranche absorbs losses first, meaning a stressed recognition situation tin accelerate NAV erosion adjacent earlier distributions are formally cut.

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