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Dividend paying stocks with yields above 8% are unusual. Fortunately, there are many closed-end funds (CEFs) and a few exchange-traded funds (ETFs) selling at a discount to net asset value (NAV) with dividends exceeding 8%.

Below is a table of CEFs with dividend payouts exceeding 8%, which trade at a discount, and have expense ratios below 2%:

CEFs With Top Dividends

Closed-End Fund (Ticker)

Strategy

Discount

Expense Ratio

Dividend Yield (ttm)

BlackRock Intl Gr & Inc (BGY)

Opt Arb/Opt Strat

-4.4%

1.1%

15.5%

Strategic Global Income (SGL)

Global Income

-4.9%

1.2%

15.0%

BlackRock Gl Opps Eq (BOE)

Opt Arb/Opt Strat

-3.0%

1.1%

14.8%

BlackRock En Capital&Inc (CII)

Opt Arb/Opt Strat

-6.8%

0.9%

14.7%

Eaton Vance TxMgdGlDvEIn (EXG)

Opt Arb/Opt Strat

-12.3%

1.1%

14.1%

AGIC Intl & Prem Str (NAI)

Opt Arb/Opt Strat

-3.4%

1.3%

14.0%

Eaton Vance T-M D-E Inc (ETY)

Opt Arb/Opt Strat

-12.5%

1.1%

13.9%

Eaton Vance R-Mgd Eq Inc (ETJ)

Opt Arb/Opt Strat

-13.2%

1.1%

12.3%

ING Gl Eq Div & Prem Opp (IGD)

Opt Arb/Opt Strat

-3.7%

1.1%

12.3%

Mexico Fund (MXF)

Emerging Markets

-9.2%

1.5%

11.9%

BlackRock Enh Eq Div Ach (BDJ)

Opt Arb/Opt Strat

-6.9%

1.2%

11.9%

First Tr Active Div Inc (FAV)

Global

-2.7%

1.7%

11.8%

ING Gl Adv & Prem Opp (IGA)

Opt Arb/Opt Strat

-3.1%

1.0%

11.7%

Zweig Total Return (ZTR)

Income & Pref Stk

-13.4%

1.1%

11.7%

Alpine Tot Dynamic Div (AOD)

Global

-2.8%

1.5%

11.7%

BlackRock EcoSolutions (BQR)

Sector Equity

-7.5%

1.5%

11.5%

Eaton Vance Tx-Mg Gl B-W (ETW)

Opt Arb/Opt Strat

-12.3%

1.1%

11.4%

Eaton Vance T-M B-W Opps (ETV)

Opt Arb/Opt Strat

-11.7%

1.1%

11.4%

Eaton Vance Enh Eq Inc (EOI)

Opt Arb/Opt Strat

-11.8%

1.1%

11.3%

Nuveen Eqty Prem Adv (JLA)

Opt Arb/Opt Strat

-10.5%

0.9%

11.1%

ING Risk Mgd Nat Res (IRR)

Sector Equity

-4.2%

1.2%

11.0%

Eaton Vance T-M B-W Inc (ETB)

Opt Arb/Opt Strat

-10.8%

1.1%

10.9%

Eaton Vance Enh Eq Inc 2 (EOS)

Opt Arb/Opt Strat

-10.0%

1.1%

10.8%

Nuveen Fund Advisors Inc (JPZ)

Opt Arb/Opt Strat

-10.3%

0.8%

10.7%

Global High Income (GHI)

Emerging Mkts Debt

-2.4%

1.5%

10.3%

Nuveen Glbl Gvt Enh Inc (JGG)

Global Income

-9.6%

1.1%

9.7%

How do CEFs work? CEFs are mutual fund companies that buy and sell investments from a fixed pool of capital. Shares in CEFs are sold by current owners, often at prices that are lower than the sum of their holdings. When you buy a CEF, your investment pays expenses to the fund manager. The hope of CEF investors is that the return on their assets will exceed the fund manager’s expenses.

There is a relationship between discount and expenses that requires some thought. A fund is not cheap just because it sells at a discount. Instead, the fund must be discounted enough so that its fees are overwhelmed by its expected returns. High dividends are especially attractive in CEFs because capital returned to investors will not be subject to fees in the future.

Careful research on each fund’s holdings and management are required before investing. This list is a good launching point to determine if any of these CEFs should join top dividend stocks in your fixed-income portfolio.

Alternatively, individual investors may find high dividends among a few ETFs. Here is a list of ETFS which have a dividend yield greater than eight percent:

Extreme Dividends From ETFs

Ticker

Div Yield

Performance (Year to Date)

Beta

P/E

P/B

Expense Ratio

Strategy

EWEF

9.8%

-8.9%

1.02a

12.0

1.22

0.41%

Diversified Stock

KBWD

10.1%

-5.5%

N/A

8.6

1.11

0.49%

Financials and REITs

REM

10.5%

-7.7%

0.74

7.6

1.02

0.48%

Financials and REITs

PSP

11.2%

-11.6%

1.7

13.0

1.05

0.70%

Financial and Industrial Stocks

BBH

11.0%

10.0%

0.2

14.0

2.92

Biotech Stocks

DRW

11.8%

-3.2%

1.36

13.0

0.98

0.58%

International Real Estate

MLPL

12.3%

2.8%

N/A

N/A

N/A

0.85%

Levered MLPs

IIH

14.6%

-19.7%

0.76

31.7

3.4

N/A

Internet Stock

PCEF

8.4%

1.0%

N/A

12.8

1.93

0.50%

Closed-Ended Funds

RWX

9.5%

-3.2%

1.24

15.2

0.9

0.60%

International Real Estate

*Category average beta

Unfortunately, some of these ETFs bundle other funds together and charge an additional fee. Do not buy a fund of closed-end funds or REITs that you can readily purchase in the market. As an investor, you should be disgusted by fees in general, and there is no shortage of companies lining up to charge you fees.

Instead, consider funds that buy other investments directly or provide you access to markets you cannot access on your own. EWEF, PSP, BBH, MLPL, and IIH provide portfolios of stocks and charge a fee. You only pay fees once, at the final ETF level for exposure to these investments. International real estate funds like DRW and RWX are worthy of consideration by US investors. They might invest in other funds, but many of its holdings cannot be accessed by investors in the United States.

In general, the highest dividend paying CEFs look more attractive than the highest dividend paying ETFs. Though they suffer higher fees, CEFs often trade at significant discounts to their net asset value, which is usually not the case for ETFs. However, these discounts do not disappear overnight, and are thought to be a consequence of poor CEF liquidity. Long-term investors ought to consider CEFs trading at a discount, while short-term investors might be more inclined to consider high-dividend ETFs.

Source: Dividend Investing: Closed-End Funds Vs. ETFs