The 13 closed end fund (CEF) types on average were down 0.8% for the week ending 10/16/09. On an aggregate unweighted basis, the weekly average price change for 618 CEFs was down 1.6%.

The weighted 49 CEFs comprising the Claymore CEF Index registered an average advance of 1.0% for the week.

R.I.P.: Prior to the CEF Weekly Review, it is altogether fitting and proper for serious CEFs investors to take a moment to morn the untimely death (execution style) of a good friend: ETFconnect.com.

This unfortunate passing will create a hole in the knowledge base and likely result in the diminished interest in the CEF market segment.

"If Patrick Henry thought that taxation without representation was bad, he should see how bad it is with representation." – The Farmer's Almanac

I said in Part I that I’d answer any questions or comments at the beginning of this discussion, then proceed to a modest proposal for getting all Americans more involved in tax reform.

Concerned about taxes? Looking for income? Check out tax free income stocks. There are many stocks, which are primarily closed end funds, which pay dividends that are tax free. This tax free income is generated from municipal bonds in the portfolio.

Municipal bonds are issued by states, counties, cities, and other governmental agencies. Income from those bonds is exempt from Federal income taxes, and if the bonds are issued in your state of residence, the income is exempt from state income taxes also. Municipal bonds issued by Puerto Rico and other U. S. dependencies are exempt from state income taxes also for residents of most states. There are over 200 different tax free income stocks according to WallStreetNewsNetwork.com, many of which yield over 8%.

Somehow I missed this but that doesn’t mean anything, I miss a lot of things. So if you’re up to speed on the government providing reinsurance for municipal bonds then skip this post.

If not, here is a little blurb I found on Fox Business:

In the fourth quarter of 2008, the municipal bond market collapsed along with the rest of the credit markets. Lately there has been a small revival. Still, depressed bond prices and wide spread credit concerns leave open big opportunities for investors in the new issue and secondary market, if you know where to look.

Long maturity tax exempts on average now yield 130% of comparable Treasury bonds and that’s before the exemption benefit. A portion of that differential may be attributed to what many have termed artificially low Treasury rates. Not that long ago, exempt yields averaged 75% of Treasuries. At no time since the 1930’s, has a full understanding of municipal credit risk been more valuable.

Are you concerned about the possibility of higher taxes on dividends? You might want to take a look at tax free income stocks. There is a group of stocks out there, technically closed end funds, which pays dividends that are tax free. This tax free income comes from municipal bonds in the portfolio.

Muni bonds are issued by states, counties, cities, and other governmental agencies. Income from those bonds is exempt from Federal income taxes, and if the bonds are issued in your state of residence, the income is exempt from state income taxes also. Municipal bonds issued by Puerto Rico and other U. S. dependencies are exempt from state income taxes also for residents of most states. There are over 200 different tax free income stocks according to WallStreetNewsNetwork.com, over 30 of which yield over 8%.

iShares S&P National Municipal Bond Fund (MUB)
Market Vectors-Lehman Brothers AMT-Free Short Municipal Index ETF (SMB)
Market Vectors-Lehman Brothers AMT-Free Intermediate Continuous Municipal Index (ITM)
Market Vectors-Lehman Brothers AMT-Free Long Continuous Municipal Index (MLN)
PowerShares Insured National Municipal Bond Portfolio (PZA)
SPDR Lehman Municipal Bond ETF (TFI)

Remember that, the dividends may fluctuate, the share price will fluctuate, and the CEFs are not guaranteed by any governmental entity. Also, the dividends from some of these may be only partially tax- free. It is important to contact the company to verify the tax status of dividends before investing, and to contact your tax preparer regarding any tax issues.

Many income investors are looking for monthly dividend payments to support their income during retirement. Other pre-retirement investors want monthly dividend stocks for their IRAs for faster compounding.

This list is now up to 150 different stocks, CEFs, REITs, floating rate funds, and oil income funds [such as Canadian royalty trusts], all of which are traded on the New York Stock Exchange or the American Stock Exchange. I've added over twenty new securities since the year-end update, reposted the yields, kept the readers' recommendations of sorting by yield with the highest first, and identifying the Canadian companies [due to tax withholding issues].

Due to requests from readers, I have sorted the list by yield, from highest to lowest. In addition, I have identified the Canadian trusts due to the tax withholding issue which can significantly affect the yield, especially with regard to holding these Canadian Oil Income Trusts in retirement plans (they all trade in the U.S.). The list shows the name of the stock, the stock market symbol, the yield, and if the stock is Canadian.

1. Aberdeen Asia-Pacific Income Fund Inc. (FAX) 6.6%