GDV returned 42% in a year by betting on dividend anchors like JPMorgan and Amex

Gabelli Dividend & Income Trust (NYSE:GDV) trades around $28 and has returned 42% over the past year, a number that tells you something important before you even look at the income. This closed-end fund launched in November 2003 with $2.9 billion in total net assets and seeks high total return with an emphasis on dividends and income. It uses leverage, which amplifies both gains and losses, and carries a 1.5% expense ratio.

How GDV Generates Its Income

GDV has delivered strong dividend consistency for its shareholders.

GDV collects dividends from its holdings and distributes that income to shareholders. Leverage means the fund borrows money to buy more securities, boosting distributions when markets cooperate and compressing them when they do not. The portfolio leans heavily on financial services at 18% of assets, followed by health care at 9% and food and beverage at 7%.

Top holdings driving the income are:

1. JPMorgan Chase (NYSE:JPM | JPM Price Prediction)
2. Mastercard (NYSE:MA)
3. American Express (NYSE:AXP)
4. BNY Mellon (NYSE:BK)
5. Microsoft (NASDAQ:MSFT)

JPMorgan and American Express: The Dividend Anchors

JPMorgan is the clearest dividend anchor. The bank pays $1.50 per quarter, climbing steadily from $1.00 per quarter in 2023 with no missed payments across 27 years. With FY2025 EPS of $20.02 and a dividend yield near 2%, the payout ratio sits well below 30%, leaving room before any stress scenario threatens the dividend. The bank generated a 33.9% profit margin and holds $343 billion in cash. This dividend is safe.

American Express raised its quarterly payout from $0.82 to $0.95, a 16% increase backed by FY2026 guidance calling for EPS of $17.30 to $17.90. The company’s net write-off rate of 2.0% for the full year is best-in-class for a credit card issuer, and net card fee revenues have posted double-digit growth for 30 consecutive quarters. The dividend is well-supported and growing.

BNY Mellon: Consistent Dividend Growth

BNY Mellon’s dividend trajectory is one of the most consistent in the fund. The quarterly payout has risen from $0.31 in 2020 to $0.53 today, with no cuts across the entire dataset. FY2025 net income grew 23%, and the bank delivered eight consecutive quarters of positive GAAP operating leverage. With a trailing P/E near 17x and 27.7% profit margins, the payout ratio remains modest. BNY also returned $5 billion in capital to shareholders in 2025, signaling confidence in cash generation.

Mastercard and Microsoft: Growth Stocks With Dividends

Mastercard’s yield is only 0.6%, but dividend growth tells the real story. The quarterly payment has risen from $0.40 in 2020 to $0.87 today, supported by a 45.7% profit margin and FY2025 operating cash flow of nearly $18 billion against CapEx of just $489 million. The dividend is essentially riskless at current earnings levels.

Microsoft pays $3.48 per share annually against TTM EPS of $15.97, a payout ratio well under 25%. CapEx nearly doubled to almost $30 billion as Microsoft invests in AI infrastructure, compressing near-term free cash flow. With 39% profit margins and Azure growing 39% year-over-year, the dividend faces no realistic threat.

Total Return and Interest Rate Environment

GDV shares are up 3.2% year-to-date and nearly 43% over the past year, capturing both yield and price appreciation. The 10-year Treasury sits near 4.33%, creating competition for dividend income but not pressuring GDV’s price. The Fed funds rate at 3.75% after cuts since late 2025 provides a somewhat supportive backdrop for equity valuations.

GDV’s Income Stream Is Solid, but Leverage Is the Risk to Watch

The dividends feeding GDV are safe. Every major holding has a payout ratio well below stress levels, growing free cash flow, and a multi-decade track record of uninterrupted payments. Leverage is the primary structural risk: in a sharp downturn, borrowed money amplifies losses and could pressure distributions. For investors seeking dividend growth with financial sector concentration and tolerance for closed-end fund mechanics, GDV’s income stream is solid. Those wanting simplicity or zero leverage should look elsewhere.