The Closed End Fund Paying 6.7% That Rivals the S&P 500

Adams Diversified Equity Fund (NYSE:ADX) has been paying dividends since 1929, making it one of the oldest closed-end funds in the country. Most investors under 50 have never heard of it. That is a mistake worth correcting, because the fund is currently yielding around 6.7% while quietly outpacing the S&P 500 over multiple timeframes.

How ADX Actually Generates Its Income

ADX is not a bond fund or an options strategy. It holds a portfolio of large-cap U.S. equities, with top positions including Nvidia (NASDAQ:NVDA | NVDA Price Prediction), Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and JPMorgan Chase (NYSE:JPM) Nvidia, Apple, Microsoft, and JPMorgan Chase. Income comes from two places: dividends paid by those underlying companies, and realized capital gains distributed to shareholders. The capital gains component is what makes the yield variable from year to year, and it is also what makes the fund’s distribution policy worth understanding before you rely on it for income.

ADX operates under a managed distribution policy, targeting a minimum annual distribution rate of 8% of NAV. In practice, this means four quarterly payments plus a larger year-end special distribution that reflects however much the portfolio gained during the year.

The Distribution Structure: Predictable Base, Variable Bonus

The quarterly base payments have been consistent, with ADX paying roughly $0.46 to $0.47 per quarter per quarter in 2025 — a reliable income floor investors can plan around. The year-end special distribution is where the real variability lies. That payment has swung dramatically depending on market conditions, ranging from under $0.40 in lean years to nearly $2.83 in the banner year of 2021, with the most recent November 2024 special coming in at $1.96. The range reflects how tightly the fund’s total payout is tied to equity market performance rather than a fixed income promise.

One detail worth flagging: 78% of the most recent $0.47 quarterly distribution was classified as return of capital. That is not a red flag on its own for a closed-end fund, but it does mean a portion of each quarterly check is technically returning your own investment rather than income earned. The year-end special distribution, funded by realized gains, is where genuine earnings flow through.

The Performance Case Is Real

Over the past year, ADX returned 27.6% on price alone, compared to 16.3% for SPDR S&P 500 ETF Trust (NYSEARCA:SPY). That outperformance reflects the fund’s concentrated exposure to large-cap growth names — Nvidia, Apple, and Microsoft — that drove markets higher over the period.

The longer-term picture reinforces the case. Over five years, ADX gained 107% versus 69% for the S&P 500, a gap that suggests the fund’s active management has added genuine value across a full market cycle rather than simply riding a single year’s momentum.

On a NAV basis — which strips out any discount or premium to net asset value — the fund’s 2025 NAV total return of 18.9% edged out the S&P 500’s 17.9%, and its five-year annualized NAV return sits at 15%. That consistency is what makes the performance case credible rather than a one-year fluke.

Year-to-date in 2026, ADX is down about 2.1%, roughly in line with the broader market’s 3.2% decline. Nothing alarming there.

Is the 6.7% Yield Safe?

The quarterly base payments are reliable. ADX has paid dividends for over 90 consecutive years, and the quarterly distribution has held steady or increased recently. The risk is in the year-end special, which depends entirely on how much the portfolio gains in a given year. In a flat or down market, that payment shrinks. In 2022, when markets fell hard, the special distribution dropped to $0.92. In 2023 it was $1.15. Both years still produced meaningful income, but investors who budgeted around the 2021 payout of $2.83 would have been disappointed.

The net assets of approximately $3 billion yield figure blends both the quarterly base and the variable special distribution. Treat the quarterly payments as your reliable income floor and the year-end distribution as a bonus tied to equity market performance. For income investors who also want equity upside, that structure is genuinely useful. For retirees who need a fixed, predictable monthly check, the variability in the special distribution warrants caution.

With and a portfolio of 89 positions anchored in large-cap U.S. equities, the fund itself is financially sound. The 6.7% yield is not at risk of disappearing. What it is subject to is the natural ebb and flow of equity market returns.