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3 Big Dividends, Paying Monthly, For Your Retirement Base

Aug. 08, 2021 9:35 AM ETABBV, ABT, ELV, BMY, BMYMP, CI, JNJ, MDT, MRK, PTY, RNP, THQ, TMO, UNH229 Comments


  • A monthly income stream provides a lot of flexibility for the income investor.
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  • Three picks with reliable monthly dividends.
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This article was written by

Rida Morwa profile picture

Rida Morwa is a former investment and commercial Banker, with over 35 years of experience. He has been advising individual and institutional clients on high-yield investment strategies since 1991.

Rida Morwa leads the investing group Learn More.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of PTY, RNP, THQ either through stock ownership, options, or other derivatives. 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.

Treading Softly, Beyond Saving, PendragonY, and Preferred Stock Trader all are supporting contributors for High Dividend Opportunities. Any recommendation posted in this article is not indefinite. We closely monitor all of our positions. We issue Buy and Sell alerts on our recommendations, which are exclusive to our members.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (229)

Thanks for your article; but sometimes I wonder if all the research is worth the time. The 1-3-5-10 years returns of DIA - 29%, 13%, 15%, 16%; SPY - 33%, 18%, 17%, 17%; QQQ - 32%, 30%, 27%, 23%. Used MarketWatch and am assuming that these are total returns. Unfortunately, a lot of people have not averaged the lowest of these indexes: 16% over 10 years; or 18.7% based on owning all 3 equally.
hafen profile picture
Until I was 45, I was “leveraged to the hilt”, but by the time I was 50, I had no debt. None. Zero. I’m 80, it was a great plan.
If you live your life with your finances 30% leveraged then by all means trust these CEFs. But the quick burn can come so fast that your head will spin.
PendragonY profile picture

Most homeowners live their lives leveraged far more than that.
Phil in OKC profile picture
@NCgardener I like to look at it as a calculated risk. Sort of like making hay while the sun shines. There is a time for everything, including leverage.
Think. Focus. Health. Wealth profile picture
@Phil in OKC interesting you view it as a calculated risk, so what percent of your portfolio lies in holdings with leverage greater than 30%?

re "There is a time for everything, including leverage."
How do you identify the right and wrong times for leverage?
JudasPriest profile picture
The last I looked PTY was 50% overpriced. I guess if you don't mind paying $1.50 for a dollar's value then you probably wouldn't mind buying this fund.
PendragonY profile picture

A CEF has more value than the net asset value of its portfolio. The management team has value (and for some funds that is a negative value).
PTY - sounds good. Also on my wish list these days are BIZD, RC, and AGNC.
webermahn profile picture
Not sure why you are promoting these at near or at their 3 year highs. The downside far outweighs the upside or the dividends, IMHO. I have put them on my watch list with a buy at where I see them as a Growth & Dividend stock.
Phil in OKC profile picture
@webermahn I understand your hesitancy. Your concerns remind me of my own after the 2008 market meltdown. In 2011 I was listening to a popular CFP out of Dallas who had a radio show. He bragged that his investing system had forewarned him to advise his clients to exit the market in early 2008, and they had preserved their investing capital. Well that got my attention and I bought his book, entitled, "Buy, Hold and Sell" . . . I attended one of his conferences in a public library in Oklahoma City and later scheduled an appointment with one of his offices in Oklahoma City, and sat through the sales pitch, with a single minded youngster who was following a script and ignoring my questions and concerns.

About that time, in Aug 2011, he announced on his radio program that he had advised his clients again to get out of the market and go to cash, because his research was predicting another market meltdown. Well we all know what has happened over the past 10 years with Mr. Market. I never did hear him acknowledge he had made a mistake and for his clients to get back in.

The moral of that story for me was to keep my money in the market and eventually, as I neared retirement to seek out help in managing my life's savings. That's when I decided to shift from growth to income. HDO has been a godsend for me and my wife. Rida has proven to be of sound mind and judgment with his investing ideas, and I have remained fully invested. Not every recommendation has worked out, but that is true in most cases for everyone.
There is that old saying that one has to make hay while the sun shines. I pity the followers of that Pied Piper from Dallas who advised them to get out of the market, and they missed out on the great market rally in history.
@Phil in OKC

“I never did hear him acknowledge he had made a mistake…”

Hmm. About whom does that also apply?
@webermahn If yur concerned about '3 year highs' yu probably won't be getting any BCDs, CEFs, or REITs until the next 10% correction, whenever that is. And the stox Morwa covers can't be considered 'growth' stox. They rise with a rising market, yes, but mostly they bobble about some mean, cuz they are div stox.
Mili21 profile picture
Since the article published, have been reading comments posted by readers and couldn't resist to post my comment...
Like many readers here, I was always waiting for CEF to come down to lower premium if not discount, so that I can purchase a small quantity but noticed over the period.
After waiting for a long period, I purchased PTY when it was trading at ~18% premium with full conviction and enabled DRIP as well as adding 10/15 units every time I see price favorable to me.
Doesn't mean one should add at any price/premium but if you are on side lines, you will be missing on some good stocks/CEFs/ETFs to add in your portfolio.
Hope others evaluate their own risk/reward proposition and be prepared to pull the trigger.
PendragonY profile picture

I started purchasing PTY back in March of last year and added more as it dropped to about $13. Since then I have been adding in small chunks as it increased in price. Today I have 800 shares at an average cost of $17.173 a share. And am quite happy with all of my purchases (even the last one in June at $19). If I didn't already have a big allocation I'd still be adding shares.
Pty seems attractive but alot of capital risk. Lots of recent apprec as people reach for yield. Best wait for likely interest rate increases.

Too risky.
Zucks profile picture
Have had PIMCO for over a decade, maybe longer. RNP and THQ are at the top of my next to buy list after a downturn. I have learned about these two through your columns, and further research supports you, so I thank you. They have high Morningstar ratings unlike some of your recommendations. Here I must note that you run the most successful service on SA which includes your teams continual monitoring of your portfolio so you are very proficient traders and can profit from all types of investments no matter the level of their ratings. I am an older buy and watch guy who makes few trades, so I appreciate this type of free article.
The market goes up more than it goes down, so we’ll a capital gains investor who doesn’t keep any cash safety net may lock in some losses, they will always lock in more gains because of the market trend....They will also have averaged close to 12% the last decade if they invested in the SPY.

You can also raise cash by selling long term calls and puts during a market decline. That gives you cash and time to raise the money for the puts if need be.

I personally keep 2 years of cash because I can. Could I get more if I invested it? Sure? But I don’t need it. There is a big difference between having to invest all your money and not having too...It’s why Buffett keeps 140 billion in cash. He doesn’t have too, but it’s prudent...
PendragonY profile picture

"The market goes up more than it goes down, so we’ll a capital gains investor who doesn’t keep any cash safety net may lock in some losses, they will always lock in more gains because of the market trend"

Nope, one doesn't follow from the other. There is a reason why capital gains investors spend a lot of time looking at and evaluating how to ensure they don't have to sell when prices are down. If it was the no-brainer you claim a lot less effort would be spent on it.
SleepyInSeattle profile picture
@ElPablo224 Totally agree!
Rida Morwa profile picture
@ElPablo224 Over the long-term, the trend has been decidedly upward, however the market has gone very long periods where it was down from peak. From peak in 2007, it was 2013 before SPY was back to even. In fact, 2007 was just getting back to 2000 levels. Do you suggest that investors keep 6-years of cash on hand? You must prepare for the likelihood that the future will not be at all like the past 10-years.
I've had PTY since starting my account (9mo) and its a keeper. Also HQH and THW. All have high expense ratio's. I'm a fan of PGF for its low expense ratio, steady 4.7% yield, stable share price over a long period of time.
Zucks profile picture
They have high expense ratios because you have a team working for you! Your yield is after all expenses. THQ is currently yielding about 6% and you buy Cohen and Steers, one of the most nimble CEF managers, on market dips, as I did with the preferred fund, at a yield on cost of 7%. After expenses!
@Rida Morwa great article. In the future, can you list the expenses for these funds?
PendragonY profile picture

In a quick pick article, we point at selections we have covered in depth before. And why we still like them now. We do list the yields, which are net of expenses.
Rida Morwa profile picture
@no_illusions I don't consider the "expense ratio" to be a relevant metric. It is a very awkward way to express expenses. If there is an issue with the expenses being high, it would appear in the NAV performance. I don't use it to make my decisions. If it is important to you, CEFConnect is a great resource.
THQ should increase distribution slightly.
PendragonY profile picture

Given they have been paying the same distribution since 2014 (inception), I don't expect that to happen anytime soon.
Think. Focus. Health. Wealth profile picture
@PendragonY seems Rida disagrees with you, Hmmm? :

Rida Morwa
Today, 9:04 AM

Marketplace Contributor
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@DMLJMD CEFs are required to distribute the majority of income AND capital gains. With NAV growing so quickly, it is very likely that THQ will be forced to raise the dividend.
Chip Chipperson profile picture
Ridiculous expense ratios for these funds. I'll stick with REITs like O and a basket of dividend aristocrats, staggered to pay monthly.
hafen profile picture
In these questionable times, I far prefer funds, of one sort or another, to single names, although I got here with individual names.
PendragonY profile picture

I moved hard away from funds over 10 years ago but find myself adding more funds now.
Wayne51 profile picture
@Chip Chipperson I agree. I have an amazing stream of dividends, including MAIN, O and a big flock of dividend growth stocks. It is silly to pay these expense ratios.
How does THQ distribute 5.6% annually without distributing a return of principal by liquidating positions?

The to 10 holdings which represent about 40% of the portfolio doesn't appear to support this with just dividend income after expenses?

Is the a very high yield component to the CEF?

What is the average bond rating?
PendragonY profile picture

About 35% of the distribution comes from long term capital gains. And they use leverage.
Rida Morwa profile picture
@DMLJMD CEFs are required to distribute the majority of income AND capital gains. With NAV growing so quickly, it is very likely that THQ will be forced to raise the dividend.
Great article as usual Rida, but isn't PCI better with it's 9% yield?
PendragonY profile picture

PCI is a good fund as well. I own both PTY and PCI.
racerkeith profile picture
@PendragonY PCI, PDO, PFFA, PTY. Pimco funds are winners.
PendragonY profile picture

That is why I own several of them. But PFFA isn't a PIMCO fund (although still a winner).
badger1997 profile picture
I've been eying THQ to consolidate my holdings in ABBV, BMY, MRK and PFE, all stocks in its holdings. Been thinking a lot more about simplifying things as much as possible. I also hold some HQL, which I just bought back into after previously holding HQH.
PendragonY profile picture

Holding pharma stocks can be a bit of a rollercoaster as they put out new block buster drugs or have patents expire. I like holding CEFs here so that they do the hard work of figuring out which ones to own at any given time.
badger1997 profile picture
@PendragonY My thoughts exactly. I've only been actively investing for a little over a year now and trying to sort through which pharma stocks to buy has been headscratching at best. Thanks for the great coverage as per usual.
Is a Schedule K1 needed for any of these 3 (PTY, RNP, THQ)?
PendragonY profile picture

No, these are all CEFs that issue 1099s.
@PendragonY Thank you for the quick reply! :)
if you want insanely high yields and high quality management/ safe investment

I recently discovered SSSS, suro capital on a ricochet.....suro / SSSS is a BDC , business dev company, which means it must distribute at least 90 per cent of its net to share holders.....last quarterly divie paid was jun 30, paid $2.50 per share, and this coming divie is $2.25 per share on sep 30...SSSS is currently trading at $14.23 with a price target of $16 to $20 and a NAV of $16.36 per share....looks like straight up on all time frames, daily and weekly are big and green. deadline to get in for the sep 30 divie is aug 16. buy buy buy.....they have had a few homeruns on pre ipo investments like PLTR and COUR / coursera and a few very nice deals in the pipeline...so I would say very high quality, and wired in to the menlo woodside vc net.
How do you go from psying 25 cents a share to $2.50 or $2.25? Too magical for me. Going pass.
@jimi james Thanks for that tip...I'm IN!
@cpr1200r100 it’s interesting stock growth.
Kyle Fishman profile picture
thanks for the read.
PendragonY profile picture
@Kyle Fishman

You're welcome. Thanks for reading and commenting.
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