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My recent closed-end fund research has identified several CEFs that have increased their monthly distributions to shareholders in recent months. A dividend increase not only provides more income to the shareholders but can also signal that management is confident in being able to sustain their income throughout 2012. These CEFs are also trading at significant discounts from 5-10%, suggesting they have a low valuation for potential capital gains. Here is a list of CEFs that announced increased distributions.

The monthly distribution for Calamos Strategic Total Return Fund (CSQ) has been increased from $0.0525 per share to $0.0700 per share, a 33.3% increase from the previous month. CSQ is trading at $9.63, a 9.575% discount to NAV, with a distribution rate of 8.72%. The monthly distribution for Calamos Global Dynamic Income Fund (CHW) has been increased from $0.0500 per share to $0.0620, a 24.0% increase from the previous month. CHW is trading at $8.66, an 8.75% discount to NAV, with a distribution rate of 8.59%. Calamos Investments believes that these increases are in the best interests of the funds' respective shareholders.

John Hancock Preferred Income Fund III (HPS) announced an increase in its monthly distribution rate by 8.91% to $0.1222 per share, up from the previous month's distribution rate of $0.1122 per share. The increased distribution rate is effective with the Fund's next distribution payment on April 30, 2012 and is payable to holders of record on April 12, 2012 with an ex-dividend date of April 10, 2012. HPS is trading at $18.15 with a distribution rate of 8.08%.

BlackRock Credit Allocation Inc Trust 1 (PSW) increased the distribution rate by 20% in October 2011 and its most recent fiscal year's distribution was 100% from income earned. Previously, the fund used destructive return of capital for at least a portion of its distribution in both fiscal 2007 and 2008. Since the fund changed its strategy, it has not used destructive return of capital. PSW is trading at $9.87, an 8.57% discount to NAV, with a distribution rate of 7.83%.

BlackRock Credit Allocation Inc Trust 4 (BTZ) increased the distribution rate by 11% in October 2011 and again by 3% in December 2011. Its most recent fiscal year's distribution was 100% from income earned. Previously, the fund used destructive return of capital for at least a portion of its distribution in both fiscal 2007 and 2008. Since the fund changed its strategy, it has not used destructive return of capital. BTZ is trading at $12.99, a 9.48% discount to NAV, with a distribution rate of 7.25%.

BlackRock Credit Allocation Inc Trust 2 (PSY) increased the distribution rate by 14% in October 2011 and its most recent fiscal year's distribution was 100% from income earned. Previously, the fund used destructive return of capital for at least a portion of its distribution in both fiscal 2007 and 2008. Since the fund changed its strategy, it has not used destructive return of capital. PSY is trading at $10.45, a 9.76% discount to NAV, with a distribution rate of 7.00%.

BlackRock Credit Allocation Inc Trust 3 (BPP) increased the distribution rate by 14% in October 2011 and by another 3% in December 2011. Its most recent fiscal year's distribution was 100% from income earned. Previously, the fund used destructive return of capital for at least a portion of its distribution in both fiscal 2007 and 2008. Since the fund changed its strategy, it has not used destructive return of capital. CHW is trading at $11.20, a 9.82% discount to NAV, with a distribution rate of 6.80%.

BlackRock Income (BKT) increased the distribution rate by 11% in December 2011. Its most recent fiscal year's distribution was 100% from income earned. BKT is trading at $7.49, a 5.55% discount to NAV, with a distribution rate of 6.49%. BKT has not used return of capital in the past year.

Western Asset Worldwide Inc (SBW) increased the distribution rate by 5.3% in December 2011. Its most recent fiscal year's distribution was 100% from income earned. SBW is trading at $14.50, a 6.21% discount to NAV, with a distribution rate of 6.54%. SBW has not used return of capital in the past year. Approximately 20% of income is from long-term capital gains.

LMP Corporate Loan (TLI) increased the distribution rate by 5% in December 2011 and by another 3.2% in February 2012. Its most recent fiscal year's distribution was 100% from income earned. LMP Corporate Loan Fund Inc., a non-diversified, closed-end management investment company, is managed by Legg Mason Partners Fund Advisor, LLC, a wholly-owned subsidiary of Legg Mason, Inc. and is sub-advised by Citigroup Alternative Investments LLC, an indirect wholly-owned subsidiary of Citigroup Inc. TLI is trading at $11.90, a 5.78% discount to NAV, with a distribution rate of 6.45%.

Source: CEFs Trading At A Discount With Increased Monthly Dividends In 2012