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In today’s markets (December, 2011), dividend paying stocks with yields above 10% are unusual. Fortunately, there are many Closed-End funds (CEFs) trading at a discount to net asset value (NAV) with dividends exceeding 10%.

Below is a table of CEFs with dividend payouts exceeding 10%, which trade at a discount, and have expense ratios below 2.0%:

Closed-End Fund (Ticker)

Strategy

Discount

Expense Ratio

Dividend Yield

Morg Stan India Inv (IIF)

Emerging Markets

-9.85%

1.33%

21.62%

India Fund (IFN)

Emerging Markets

-10.47%

1.32%

19.18%

Eaton Vance Enh Eq Inc 2 (EOS)

Opt Arb/Opt Strat

-14.24%

1.13%

16.24%

BlackRock Intl Gr & Inc (BGY)

Opt Arb/Opt Strat

-10.16%

1.11%

15.81%

Strategic Global Income (SGL)

Global Income

-9.47%

1.18%

15.58%

BlackRock Gl Opps Eq (BOE)

Opt Arb/Opt Strat

-9.67%

1.10%

14.78%

Singapore Fund (SGF)

Developed Market

-7.73%

1.76%

14.68%

AGIC Intl & Prem Str (NAI)

Opt Arb/Opt Strat

-5.67%

1.27%

14.22%

Alpine Tot Dynamic Div (AOD)

Global

-6.80%

1.50%

13.31%

Wells Fargo Gl Div Oppty (EOD)

Global

-7.59%

1.09%

12.86%

ING Gl Eq Div & Prem Opp (IGD)

Opt Arb/Opt Strat

-7.48%

1.07%

12.17%

Mexico Fund (MXF)

Emerging Markets

-7.78%

1.47%

12.12%

BlackRock En Capital&Inc (CII)

Opt Arb/Opt Strat

-10.75%

0.93%

12.06%

Alpine Glbl Prem Prop (AWP)

Real Estate

-15.91%

1.31%

11.74%

BlackRock EcoSolutions (BQR)

Sector Equity

-10.71%

1.42%

11.63%

Eaton Vance TxMgdGlDvEIn (EXG)

Opt Arb/Opt Strat

-17.09%

1.05%

11.51%

Advent Clay Gl Conv Secs (AGC)

Convertible Secs

-8.79%

1.93%

11.48%

ING Gl Adv & Prem Opp (IGA)

Opt Arb/Opt Strat

-9.02%

0.99%

11.19%

First Tr Active Div Inc (FAV)

Global

-10.00%

1.66%

11.09%

Global High Income (GHI)

Emerging Mkts Debt

-4.36%

1.47%

11.05%

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

Opt Arb/Opt Strat

-16.06%

1.06%

10.90%

ING Risk Mgd Nat Res (IRR)

Sector Equity

-9.65%

1.20%

10.89%

Delaware Enh Gl Div & In (DEX)

Global

-4.80%

1.95%

10.82%

Zweig Fund (ZF)

Core Funds

-11.94%

1.23%

10.77%

Putnam Premier Income (PPT)

Flexible Income

-8.02%

0.85%

10.77%

Columbia Sel Prm Tech Gr (STK)

Opt Arb/Opt Strat

-7.64%

1.21%

10.65%

Zweig Total Return (ZTR)

Income & Pref Stk

-14.93%

1.10%

10.58%

Helios Strat Mtge Inc (HSM)

US Mortgage

-5.80%

1.80%

10.47%

Guggenheim Enh Eq Inc (GPM)

Core Funds

-10.23%

1.80%

10.34%

TCW Strategic Income (TSI)

Income & Pref Stk

-6.27%

1.19%

10.34%

BlackRock Enh Eq Div (BDJ)

Opt Arb/Opt Strat

-11.41%

1.17%

10.25%

NFJ Div Int Prem Strat (NFJ)

Opt Arb/Opt Strat

-8.42%

0.97%

10.23%

Eaton Vance R-Mgd Eq Inc (ETJ)

Opt Arb/Opt Strat

-17.63%

1.07%

10.04%

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.

Many of the funds on this list return principal, not just income, to investors. This action is beneficial to investors who bought the principal at a discount. For funds with extreme discounts, income is just icing on the cake.

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.

Disclaimer: This article was written to provide investor information and education, and should not be construed as a guarantee or investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing.

Source: 10% Dividend Yields From Closed-End Funds