Top Stock to Buy #1 – BlackRock Floating Rate Income Securities Fund (FRA)
The Morningstar “four-star” rated BlackRock Floating Rate Income Securities Fund (NYSE:FRA) is a floating rate closed-end fund that could provide a protective hedge for bond holders from a rise in interest rates. The fund should benefit from both a rise in income and price, while straight bond holders will see the prices of their bonds fall. The fund seeks high current income and preservation of capital by investing at least 80% of its assets in leveraged floating rate debt securities.
Currently, the fund pays a monthly dividend annualized at $0.924 (5.89%). Talk of a rate increase by the Fed has resulted in a steady move higher despite no announcement that a rate increase is near. However, now could be a good time to buy since once interest rates rise, this fund could quickly move out of buying range.