First Trust Enhanced Equity Income Fund vs Gladstone Capital

This page compares First Trust Enhanced Equity Income Fund and Gladstone Capital Corp, offering a neutral overview of their business models, financial performance, and market context. It presents accessible information to help readers understand similarities and differences. Educational content, not financial advice.

Comparison Snapshot

Key Financial Metrics

FFA

Metric

GLAD

$432.14M

Market Cap

$470.39M

N/A

Potential Profit

5.16%

N/A

Analyst Rating

Buy

Investment Analysis

First Trust Enhanced Equity Income Fund

FFA

Pros

The fund has delivered solid long-term total returns with a 10-year annualized return of approximately 11.4%.
It offers a relatively attractive dividend yield around 6.5-7.3%, supported by its covered call strategy.
The fund's portfolio is diversified across U.S. and some foreign equities, aiming for income and modest capital appreciation.

Considerations

The fund often trades at a discount to its net asset value, recently around 4-8%, which may reflect market skepticism.
Performance can be volatile with best and worst three-month returns ranging from +17% to -19%, signifying market sensitivity.
As a closed-end mutual fund using options strategies, it can carry higher risk and complexity compared to traditional equity funds.

Gladstone Capital

GLAD

Pros

Gladstone Capital typically focuses on middle-market debt and equity investments, offering potentially steady income streams.
Its business model includes diversification across multiple portfolio companies, reducing single-entity risk.
The company maintains a focus on consistent dividend distributions, appealing to income-focused investors.

Considerations

Gladstone Capital's performance is sensitive to credit market conditions and economic cycles affecting its portfolio companies.
Its yield and NAV can be pressured by rising interest rates and defaults within its credit portfolio.
The company faces execution risks related to assessing creditworthiness and managing portfolio companies in mid-market segments.

About The Companies

First Trust Enhanced Equity Income Fund (FFA)

The First Trust Enhanced Equity Income Fund is a diversified, closed-end investment fund. Its primary objective is to provide a high level of current income and gains, with capital appreciation as a secondary goal. To achieve this, the fund invests in a broad portfolio of equity securities, primarily common stocks of US companies and US dollar-denominated equities of non-US issuers traded on US exchanges. A key part of its strategy involves consistently writing (selling) covered call options on a portion of its assets. This technique is designed to generate additional income for the fund. It's important for potential investors to understand that while this strategy can enhance income, it may also limit the potential for capital gains. As with any fund, the value of its investments can go down as well as up, and returns are not guaranteed.

Gladstone Capital (GLAD)

Gladstone Capital Corporation is a type of investment firm known as a business development company (BDC). It provides capital to established, smaller businesses in the United States, specifically what's termed the 'lower middle market'. These are typically companies with annual earnings between $3 million and $25 million. Gladstone's investment approach has two main goals. Firstly, it aims to generate current income by providing secured loans to these companies. This income helps fund its operations and potential distributions to shareholders. Secondly, it seeks long-term capital growth by taking small equity stakes in the companies it lends to. This dual strategy allows investors to potentially benefit from both regular income and the growth of the underlying assets. As with any investment, it's important to remember that capital is at risk and returns are not guaranteed.

Buy FFA or GLAD in Nemo

🆓

Zero Commission

Trade stocks, ETFs, and more with zero commission. Keep more of your returns.

🔒

Trusted & Regulated

Part of Exinity Group 2015, serving over a million customers globally.

💰

6% Interest on Cash

Earn 6% AER on uninvested cash with daily interest payments.

Discover More Comparisons

First Trust Enhanced Equity Income Fund vs PennantPark

First Trust Enhanced Equity Income Fund vs Red River Bancshares

First Trust Enhanced Equity Income Fund vs Northfield Bancorp

First Trust Enhanced Equity Income Fund–Northfield Bancorp

First Trust Enhanced Equity Income Fund vs Gladstone Capital

Comparison Snapshot

Investment Analysis

First Trust Enhanced Equity Income Fund

Pros

Considerations

Gladstone Capital

Pros

Considerations

About The Companies

Buy FFA or GLAD in Nemo

Zero Commission

Trusted & Regulated

6% Interest on Cash

Discover More Comparisons

First Trust Enhanced Equity Income Fund vs PennantPark

First Trust Enhanced Equity Income Fund vs Red River Bancshares

First Trust Enhanced Equity Income Fund vs Northfield Bancorp

Frequently asked questions

What is the key difference between a closed‑end fund like First Trust Enhanced Equity Income Fund and a typical equity investment?

How do dividends and income strategies differ between stock_1 and stock_2?

What does ‘yield’ mean in this comparison, and why can it vary for stock_1?

What kind of income do investors typically seek from stock_2, and how is it generated?

How might market conditions affect performance for both stocks in a comparison?

What does a discount to net asset value indicate for stock_1, and how should this be interpreted?

How could rising interest rates influence stock_2’s performance and yield?

What should a reader check when comparing these two stocks beyond headline yields?

What does it mean that stock_1 uses an options strategy, and how does that affect risk?

Is there a fundamental difference in diversification between the two, and why does it matter?

What educational takeaway should a reader keep in mind when assessing these two stocks?

Comparison Snapshot

About The Companies