Most dividend stocks
and funds pay their dividends quarterly (every three months).
investors, especially those relying on dividends to help fund their
retirement, prefer monthly payouts that provide a steady and
predictable income that better matches their regular expenses.
Fortunately, many closed-end funds (CEFs) that pay
dividends, pay them monthly. If you’re rusty on your the
terminology; unlike conventional
(open-end) mutual funds that create new shares as needed, CEFs issue
a fixed number of shares at the IPO, and after that, those shares
trade on the open market just like stocks.
As a result, CEF share prices vary with supply and demand and
typically trade at a discount (below) or premium (above) their net
asset value (per-share value of holdings). Although many trade at
5% to 10% discounts, outperforming funds,
or those focusing on currently hot categories, trade at premiums.
With that in mind, here are the five best CEFs that qualify, at
least in my view as “retirement suitable” funds. To make my
“retirement suitable” list, a CEF must pay monthly dividends
equating to a 6% or higher dividend yields. My “five best” funds are
those that have generated the highest total returns (share price
appreciation plus dividends) over the past 12-months. Here’s the
Calamos Global Dynamic Income (CHW).
Has returned 28% over the past 12-months and 13%, on average,
annually over the past three years. It pays $0.07 per share monthly,
which equates to a 9.1% dividend yield. It holds a mix of mostly
U.S.-based common and preferred stocks, and investment and
non-investment credit rated corporate securities. It recently traded
even with its net asset value.
Eaton Vance Enhanced Equity Income Fund II (EOS).
Returned 23% over 12-months and averaged 12% annual returns over
three years. It holds U.S.-based common stocks, overweighting
technology (34% of portfolio), The fund uses a covered call strategy
to generate income. Pays $0.0875 monthly dividends equating to a
6.6% annual yield, and recently traded even with its net asset
PCM Fund (PCM).
Returned 22% over the past 12-months and averaged 13% annually over
three years. Holds mostly mortgages secured by commercial real
estate properties, but also holds corporate bonds. Pays $0.08 per
share monthly dividends (8.3% yield). Recently traded at a 12%
premium to its net asset value.
Eaton Vance Tax Advantaged Global Dividend Opportunities (ETO).
Returned 21% over 12-months and averaged 10% over three years. Holds
a mix of U.S.-based and global common and preferred stocks,
overweighting financials. Pays $0.18 per share monthly dividends
(8.4% yield). Recently traded at 6% premium to its net asset value.
Pimco Corporate & Income Opportunities (PTY).
Returned 20% over 12 months and averaged 15% annually over the past
three years. Holds a mix of corporate bonds and securities secured
by residential real estate. Pays 0.13 per month, which equates to a
9.1% dividend yield. Recently traded at a 17% premium to its net
As always, consider these funds to be research candidates, not a buy
list. The more you know about your investments, the better your