Eight Monthly High-Yield Dividend Stocks

There are a huge number of stocks, including closed end funds, real estate trusts, master limited partnerships, and oil royalty trusts, which pay their dividends monthly. The advantages of receiving monthly dividends are several:

1. They accelerate the investors' return of capital.
2. They compound faster than quarterly dividend stocks when reinvested.
3. They provide a steadier cash flow for retirees on a fixed income who required a consistent monthly income.
4. The stream of income helps reduce volatility.
5. Some of these monthly dividend stocks have yields that are partially or wholly tax free.

According to WallStreetNewsNetwork.com, there are 323 different stocks which pay their dividends on a monthly basis, with yields from half a percent to almost 50%. Be careful, as many of these yields are extremely high and those dividends may not be sustainable.

• The highest yielding growth and income fund is the Boulder Growth & Income Fund Inc. (BIF) with a yield of 25.9%. It is a closed end equity fund which invests in stocks in various sectors and real estate investment trusts. Their recent dividends have been considered almost all return of capital, in other words, non-taxable. Talk to your tax advisor regarding the taxation of dividends before investing. They have been paying dividends since 1988.
• Harvest Energy Trust (HTE) is a Canadian oil income trust yielding 30.8%. This Calgary, Alberta based company operates petroleum and natural gas properties in western Canada. They have been paying monthly dividends since 2005.
• The highest natural gas royalty trust is Hugoton Royalty Trust (HGT) which yields 13.2%. It has paid monthly dividends since 1999.
• The highest yielding global real estate CEF is the ING Clarion Global Real Estate Income Fund (IGR), which invests in real estate stocks, and yields 22.9%. They have been paying monthly dividends since 2004.
• Calamos Convertible Opportunities & Income Fund (CHI) is the highest yielding convertible bond fund, with a yield of 18.8%. It invests in high yield bonds and convertible bonds of all ratings. It has been paying monthly dividends since 2002.
• One of the highest yielding dividend paying stock funds is the ING Global Equity Dividend & Premium Opportunity Fund (IGD) which yields 17.4%. They have been paying monthly dividends since 2005.
• Flaherty & Crumrine Preferred Income Opportunity Fund Inc. (PFO) is one of the highest yielding preferred stock CEFs. It yields 13.7% and has paid monthly dividends since 1992.
• The highest yielding floating rate bond fund is PIMCO Floating Rate Income Fund (PFL) yielding 14.6%. They have been paying monthly dividends since 2003.

Disclosure: Author does not own any of the above.

Comments

[bluesmoke:]

Good article.

As boomers enter retirement, you will see more demand for these types of income streams. They are a necessary part of your portfolio. When the prices drop in half as they have done in recent months, the younger investor should relish the opportunity to reinvest at a lower monthly cost.

I did notice some recommendations that had potential negative earnings, a caveat. But the larger funds spread the risk around.

Also, come tax time, there might be some headaches as you wait for your tax forms.

2008 Nov 05 08:49 AM

[epeon:]

you have to be very careful about these recommendations. For example, HGT pays 13.2% but that is based on earnings over the last several months in which crude was high. Very unlikely to see that going forward.

Also, these are trusts which means that there yield of crude, over time, is going down.

2008 Nov 05 09:10 AM

[MILESCFA:]

Beware Hi yields like these. I have owned at least 3 of the named funds and you can note by price charts they're all down about 50% over the last 12-18mns.

Let's see: (50%) cap loss + (say) +20% yield = you LOSE 30%.

At some point, they should be attractive, but whenever you see "unrealistic" yields, beware unrealistic expectations.

Take CHI, for example. I once managed an institutional convertible bond fund and the Calamos guys set the standard - they know their business. Nonetheless, CHI's "net asset value" (NAV) dropped about 50% in Oct vs Jul. 50%. The stock market is down ~25%. When PROs lose TWICE what the market does, something's amiss!

An excellent FREE site to use to investigate (yield) ETFs is eftconnect.com. You can see things like (1) how long has the dividend been paid, (2) what's the average TOTAL returns over 1,3,5,10 yrs, (3) what's the trend in NAV, (4) how much do the fund managers pay themselves (I looked for 1% fee or less), etc.

2008 Nov 05 04:53 PM

[User 61430:]

thank you-I own some already


On Nov 05 08:49 AM bluesmoke wrote:

> Good article.
>
> As boomers enter retirement, you will see more demand for these types
> of income streams. They are a necessary part of your portfolio. When
> the prices drop in half as they have done in recent months, the younger
> investor should relish the opportunity to reinvest at a lower monthly
> cost.
>
> I did notice some recommendations that had potential negative earnings,
> a caveat. But the larger funds spread the risk around.
>
> Also, come tax time, there might be some headaches as you wait for
> your tax forms.

2008 Nov 05 04:53 PM

[limitout:]

chi also reduced their monthly divi. by $.045 to $.095 ouch!


On Nov 05 04:53 PM MILESCFA wrote:

> Beware Hi yields like these. I have owned at least 3 of the named
> funds and you can note by price charts they're all down about 50%
> over the last 12-18mns.
>
> Let's see: (50%) cap loss + (say) +20% yield = you LOSE 30%.
>
> At some point, they should be attractive, but whenever you see "unrealistic"...
> yields, beware unrealistic expectations.
>
> Take CHI, for example. I once managed an institutional convertible
> bond fund and the Calamos guys set the standard - they know their
> business. Nonetheless, CHI's "net asset value" (NAV) dropped about
> 50% in Oct vs Jul. 50%. The stock market is down ~25%. When PROs
> lose TWICE what the market does, something's amiss!
>
> An excellent FREE site to use to investigate (yield) ETFs is eftconnect.com.
> You can see things like (1) how long has the dividend been paid,
> (2) what's the average TOTAL returns over 1,3,5,10 yrs, (3) what's
> the trend in NAV, (4) how much do the fund managers pay themselves
> (I looked for 1% fee or less), etc.

2008 Nov 05 11:53 PM

[grinninbrit71:]

I haven't had time to follow up and investigate the compostion of the yields. But your article seems fair and thoughtful so I suspect your not one of those that advertise return-of-capital as dividend or yield are you ? There are a lot of deceptive articles out there that lead more simple investors into thinking they can get returns on investment in the double-digits and even 20%+. These funds you speak of are paying these returns purely from income, is that correct?

2008 Nov 09 04:40 PM

[grinninbrit71:]

Uh-oh, maybe I need to retract my vote for the author being fair and thoughtful. The first fund highlighted in his list was BIF. They announced this week their entire "dividend" is going BYE-BYE. So I go to cefa.com and look up its detailed information. There are 2 numbers listed, one is "distribution yield" and the other is "income yield". Distribution yield was 25% and income yield was 1%. So I guess that distribution yield is actually "fake" income, return-of-capital. Meant to entice investors in so they can soak up their management fee. And now whooooooosh, its all gone. Swell.

2008 Nov 14 04:59 PM

[maryanne:]

Dumped BIF & BTF yesterday, lost $10,000. I also hold IGD for 2 years now, it is very consistent stable payer. Brought it when it was 8%, now its 22%. Got into HTE at $8 (Oct 6 was lowest for canroys and mlps), popped up nicely to $11 (29%)

2008 Nov 18 06:45 PM

[silver-bug:]

HTE is under a lot of sell pressure, unfortunately. But it is also getting more attractive at the lower prices since the P/E comes down. I'd definitely buy more. Why? Oil prices cannot, I repeat, cannot stay under $50 for long. I see a rebound in oil in a few months. There is something fishy going on with Oil swapping in the SPR. Which means, govt. is swapping higher quality oil for lower quality oil, and selling the higher quality oil and flooding the market, thus depressing oil prices, yet keeping the inventories at almost the same level with the swapped oil.

Feb 23 10:47 PM