Western Asset High Income Fund II Inc. (HIX)

Western Asset High Income Fund II offers a high 13.84% yield but cannot cover its distribution, consistently eroding its net asset value. The fund underperforms its benchmark indices over most timeframes, despite its higher yield. HIX has limited foreign currency exposure, although it does have a reasonable level of international bond holdings.

Western Asset High Income Fund II (HIX) offers a high dividend yield of 14.3%, but its inconsistent earnings history raises concerns about dividend sustainability. HIX's performance is heavily influenced by the interest rate environment, with higher rates negatively impacting its price and NAV over the past five years. The fund's leverage strategy and significant exposure to below-investment-grade credit increase its risk, especially in a prolonged high-interest-rate environment.

NEW YORK--(BUSINESS WIRE)--Category: Financials.

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HIX, a high-leverage fixed-income CEF, blends U.S. high-yield and emerging market bonds, making it a high beta play in the fixed-income space. With credit spreads at historic lows, leveraging up is imprudent; HIX's high beta nature magnifies risks in market downturns. HIX experienced a -36% drawdown in 2022. HIX's distribution is unsustainable, relying heavily on the return of capital, which erodes NAV and heightens vulnerability in market sell-offs.

In recent years, many conservative investors relying on fixed-income securities for their income needs have found their buying power cut anywhere from 15% to over 100% on some items, due to inflation.

Western Asset High Income Fund II offers a high 13.42% yield but has a concerning performance trend, with a 50.11% share price decline over ten years. The HIX closed-end fund's high leverage (32.28%) and unsustainable distribution strategy pose significant risks, despite its attractive yield compared to peers. The fund's global bond focus, including emerging markets, is appealing as it could offer a degree of protection against the long term U.S. dollar decline.

Six years ago, I wrote my first article on investing, in which I outlined the criteria that had guided me when constructing my first income portfolio. I have tried to retrace here the steps leading up to that article and then subsequent developments in creating my current portfolio. Today, I favor CEFs and ETFs that, in addition to providing regular income, show a positive NAV performance since inception, thereby demonstrating their ability to also generate value over time.

It's finally happening: Management fees on our favorite 8%+ paying assets—closed-end funds (CEFs)—are falling. And some are sending their already soaring dividends even higher, too.

Western Asset High Income Fund II Inc. (NYSE:HIX – Get Free Report) declared a monthly dividend on Thursday, February 22nd, Wall Street Journal reports. Shareholders of record on Thursday, May 23rd will be paid a dividend of 0.049 per share by the closed-end fund on Monday, June 3rd. This represents a $0.59 dividend on an annualized basis and a yield of 13.42%. The ex-dividend date of this dividend is Wednesday, May 22nd. Western Asset High Income Fund II has increased its dividend by an average of 0.1% annually over the last three years. Western Asset High Income Fund II Stock Performance Shares of Western Asset High Income Fund II stock opened at $4.38 on Monday. The business has a fifty day simple moving average of $4.41 and a 200-day simple moving average of $4.56. Western Asset High Income Fund II has a fifty-two week low of $4.16 and a fifty-two week high of $5.07. About Western Asset High Income Fund II (Get Free Report) Western Asset High Income Fund II Inc is a closed-ended fixed income mutual fund launched and managed by Legg Mason Partners Fund Advisor, LLC. The fund is co-managed by Western Asset Management Company, Western Asset Management Company Limited, and Western Asset Management Company Pte. Ltd. It invests in the fixed income markets across the globe.

Western Asset High Income Fund II has a current yield of 13.27%, outperforming its peers in terms of yield. The HIX closed-end fund's share price has declined by 34.90% over the past three years, underperforming the Bloomberg High Yield Very Liquid Index. The fund has consistently paid out a larger distribution than the junk bond index, which may be appealing to income-focused investors.

According to a February 2, 2024 article in The Washington Post, grocery prices have jumped 25% since Joe Biden took office. This outpaced overall inflation, which was 19% in the same time period. The price of beef and baby food soared the most, followed by sugar and citrus fruits.

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The Western Asset High Income Fund II is undergoing a rights offering, which has pushed the fund to a deep discount.