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With the significantly negative market performance that surrounded our last election, investors are acutely aware of a potential increase in market volatility as the days pass by. Though the factors that affected our markets in 2008 are significantly less of a concern this time around, safer, well diversified investments are, in my opinion, becoming very attractive as this year's election approaches.

In a search for safety and diversity, many closed-end funds (CEF) can offer both; as well as a consistent income via frequent distributions.

CEFs, like mutual funds, offer instant diversity to investors while also offering better liquidity by way of their stock-like tradability. Safety, on the other hand, can be found by researching a number of metrics.

When focusing on consistent income from distributions, I like to look at a CEF's distribution history as well as its undistributed net investment income (UNII), a metric that shows how much undistributed portfolio income is available to meet future distributions without dipping into capital gains or shareholder capital.

Those CEFs that offer monthly distributions, have historically consistent distribution payouts, currently have undistributed portfolio income (positive UNII), and offer a high distribution rate are, in my opinion, most appealing.

Simply stated, I recently searched for CEFs with the following characteristics:

  • Monthly distribution frequency
  • A consistent distribution payout
  • Positive UNII
  • Sorted by distribution rate

Below are the top seven results, sorted by distribution rate:

1. AGIC Convertible & Income Fund II (NCZ), with an annual distribution rate of 11.72%, distributes $0.0850 per share to investors each month. This distribution rate has remained unchanged since 2009. Current UNII stands at $0.0112 per share.

As of this writing, AGIC Convertible & Income Fund II is trading at a 13.13% premium to its net asset value.

2. AGIC Convertible & Income Fund (NCV), with an annual distribution rate of 11.56%, distributes $0.0900 per share to investors each month. This distribution rate has remained unchanged since 2009. Current UNII stands at $0.0200 per share.

As of this writing, AGIC Convertible & Income Fund is trading at a 10.14% premium to its net asset value.

3. PIMCO Global Stocksplus & Income Fund (PGP), with an annual distribution rate of 9.96%, distributes $0.1834 per share to investors each month. This distribution rate has remained unchanged since the fund's inception in 2005. Current UNII stands at $0.0722 per share.

As of this writing, PIMCO Global Stocksplus & Income Fund is trading at a 72.79% premium to its net asset value.

4. Pioneer High Income Trust (PHT), with an annual distribution rate of 8.93%, distributes $0.1375 per share to investors each month. This distribution rate has remained unchanged since the fund's inception in 2002. Current UNII stands at $0.4598 per share.

As of this writing, Pioneer High Income Trust is trading at a 36.08% premium to its net asset value.

5. Helios High Yield Fund (HHY), with an annual distribution rate of 8.87%, distributes $0.0750 per share to investors each month. This distribution rate has increased from its 2008 rate of $0.0600 per share. Current UNII stands at $0.0216 per share.

As of this writing, Helios High Yield Fund is trading at a 0.49% discount to its net asset value.

6. First Trust High Inc Long/Short Fund (FSD), with an annual distribution rate of 8.77%, distributes $0.1335 per share to investors each month. This distribution rate has remained unchanged since the fund's inception in 2010. Current UNII stands at $0.2189 per share.

As of this writing, First Trust High Inc Long/Short Fund is trading at a 2.04% discount to its net asset value.

7. Guggenheim Strategic Opportunities Fund (GOF), with an annual distribution rate of 8.68%, distributes $0.1540 per share to investors each month. This distribution rate has increased from its 2007 inception rate of $0.1420 per share. Current UNII stands at $0.0414 per share.

As of this writing, Guggenheim Strategic Opportunities Fund is trading at a 7.30% premium to its net asset value.


Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in FSD, GOF, HHY, NCV, NCZ, PGP, PHT over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: 7 High-Yield Monthly Income Ideas For Election Season