• unusual bonds with high yields.
• certain fixed income closed end funds at a discount.
• dividend paying stocks, and occasionally (ugh) preferred stocks.
• non- or low dividend paying stocks that fit my eight rules, and sell out-of-the-money calls against them.
• lever the fund by borrowing at LIBOR.
• Use my mean reverting REIT, utility, LP strategy. Backtests have it generating a 20% return annually, and I haven’t tweaked it.

The thing is, though, yield is a conceit. People like to think that they are merely scraping the income off of the portfolio, when in many cases, they are truly consuming capital, but the accounting doesn’t make it look that way. Think of a high yield fund with a single-B average credit quality. During good times, the full yield, and maybe a tiny amount of capital gains comes into income. During bad times, the yield shrinks, and capital losses get passed through. Over a full cycle, the NAV of a high yield fund shrinks.

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%

Part of the reason for the open-ending might be that this is AIM's only closed-end fund, and they decided that they weren't going to launch any more. If this were the case, it may be better for AIM to concentrate their resources on their open end funds and other investment products, and not bother with this single closed-end fund. Plus, when your only closed-end fund trades at a double-digit discount for over two and a half years, it doesn't reflect well on any of your investment products.

I bought shares in RRE a little over a year ago and will vote in favor of the proposal. This isn't because I see any major problems with the fund, but I do think there are plenty of other options right now as far as closed-end real estate funds go. So I will be happy to take the 13%+ return from the elimination of the discount, and invest it elsewhere.

The article attracted some thoughtful and interesting feedback. Jay Buster pointed out that you can arbitrage the spread between CEFs and ETFs by selling short CEFs trading above net asset value (NAV). Lawrence Mouskoph argued that "The discounts on the REIT CEF’s keep getting wider and wider... Who’s to say the discounts might not go up to 25%, maybe 30%, maybe 40%?". And the team that produces CEF Orphan wrote the following analysis of the Neuberger Berman Real Estate Securities Income Fund (NRO) and the Cohen & Steers REIT and Utility Income (RTU), which is worth reading for anyone who owns those funds:

But this actually leads to interesting opportunities for ETF and CEF investors. Their structure means that ETFs don't trade at discounts or premiums to net asset value over sustained periods of time, unlike CEFs. And that means that sometimes a CEF will trade at a discount to net asset value and a similar ETF won't.

Any ETFs or Closed-End Funds that we haven't covered that you think we should? Leave a comment below.