MacroPass™: How To Receive A Year's Worth Of Dividends In Only 7 Months

A quirk in payment schedule = extra yield for savvy income investors

This installment of our popular MacroPass™ service for premium members of this Substack comes from income investor Steven Bavaria, whom I interviewed recently.

In Steven’s letter to his subscribers below, he reveals a discovery where savvy income investors can receive a full year’s worth of dividends in just 7 months, due to a quirk in how several Barings funds are structured.

This then allows the proceeds to be re-invested for another 5 months, really turbocharging your annual return.

If you’re interested in learning how to take advantage of this opportunity, read Steven’s full write-up below.

As a reminder, MacroPass™ is a weekly rotating selection of premium analysis from many of the big thinkers interviewed on Thoughtful Money.

To-date that list of contributors includes experts like Lacy Hunt (Hoisington), Stephanie Pomboy (Macro Mavens), Danielle DiMartino Booth (QI Research), Tom McClellan, Michael Howell (Capital Wars), Darius Dale (42 Macro), Doomberg, Ted Oakley (Oxbow Advisors), Kevin Muir (The Macro Tourist), Alf Peccatiello (The Macro Compass), Lance Lambert (ResiClub), Ed Yardini (Yardini Research), David Hay (Haymaker), Melody Wright (M3_Melody), David Stockman (Contra Corner), David Brady (FIPEST Report), John Rubino, Adam Kobeissi (The Kobeissi Letter), Sven Henrich (Northman Trader), Jeff Clark (The Gold Advisor), Charles Hugh Smith, Steven Bavaria (Inside the Income Factory®), Chris Whalen (The Institutional Risk Analyst), Felix Zulauf, Jesse Felder (The Felder Report), Brent Johnson (Macro Alchemist), Pieter Slegers, (Compounding Quality) and Anna Wong (Bloomberg Economics).

Recent MacroPass™ reports in this series include:

• Pieter Slegers on 100 insights from the recent Berkshire Hathaway annual meeting

• Brent Johnson on the power dynamics underlying the tariff war

• Lacy Hunt on his latest quarterly outlook

• David Hay on the potential upside of unloved energy stocks

• Anna Wong on the expected impact of the 'Liberation Day' tariffs

• David Stockman on just how out-of-control the federal deficit is

If you’re already a premium subscriber to this Substack, just continue below to access Steven’s full write-up

But if you’re not (yet), read the start of it below and consider upgrading to premium and access the full version, as well as all past and future MacroPass™ content.

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MPV 'Dividend Holiday Trade' (Follow-Up To Recent Article)

May 2025 by Steven Bavaria

Summary

• MPV's unusual way of paying its "quarterly" distributions in 4 payments all within a 7 month period, raises an interesting opportunity.

• The 5 month period when no distributions are paid could actually be used to buy a different fund that paid its distributions in a more balanced manner throughout the year.

• The investor would then get the full annual distribution payout from MPV, plus 5 months worth of another fund's distributions.

• Depending on the selection of the 5-month "replacement fund" we could raise our total annual payout from 8.6% to a range of 11% to 15%.

• Obviously there is a range of risk/rewards that accompanies our choice of whether to do this, and with which replacement funds.

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MPV - The "Dividend Holiday Trade"

Suppose we had a job where we were paid a salary all year long, but were told we only had to come to work seven months of the year, and could take the other five months off.

Other things being equal, I suspect many of us would feel that was a pretty good deal. Obviously we could spend the five months off taking it easy or engaging in our favorite sports, or other forms of recreation. Alternatively, if we wanted to maximize our income, we could find another job for the five months we had off from the first job, thus essentially getting paid 17 months of income for 12 months of work.

In our article last week about Barings Participation Investors (MPV) and its virtually identical twin sibling, Barings Corporate Investors (MCI), we described how both funds have an unusual timing delay of five months, from January until June, between the payment of their 4th quarter "end-of-year" dividend, and their "1st quarter" dividend, which in fact isn't paid until after the funds' annual meeting that normally occurs in May (May 15 this year) with the dividend paid in early June.

This means that