Monday, May 26, 2008

Top Tax Free Dividend Stocks

When the stock market is volatile or in a bearish mode, investors turn towards income producing securities. The baby boomers are also starting to reach retirement age, and are looking for income, tax reduction, and safety. Tax free dividend stocks, or more correctly, tax free closed end funds, fill this need. These CEF's invest in municipal bonds which interest that is tax free for Federal tax purposes, and exempt from state income taxes for residents of the state in which the bonds are issued.

One of the highest tax free yielding stocks [CEF's are referred to as stocks for the purpose of this article] is BlackRock Municipal Income Trust (BFK) which yields 6.3%. The CEF has been paying monthly dividends since 2002. It invests in municipal bonds of various governmental agencies including industrial and pollution control, hospital, housing, transportation, education, water, sewer, and power.

If you are a Florida resident, you might want to take a look at BlackRock Florida Municipal Income Trust (BBF), which yields 5.9%. They have been paying monthly dividends since 2001. They invest in hospital, water, sewer, education, housing, power, transportation, and pollution control municipal bonds.

For Californians, you may want to consider the Nuveen California Dividend Advantage Municipal Fund (NAC), yielding 5.3%. They have paid monthly dividends since July of 1999.

Texans should consider a Texas CEF called Nuveen Texas Quality Income Municipal Fund (NTX), that yields 5.1%. Their dividends have been paid since October of 2001.

A New York CEF that pays about 5.5% is the PIMCO New York Municipal Income Fund II (PNI). They have been paying monthly dividends since August 2002.

BlackRock New Jersey Municipal Bond Trust (BLJ) is worth examining by New Jersey residents, as it yields 5.4%. They have been paying dividends since June 2002.

For Massachusetts residents, there is the Van Kampen Massachusetts Value Municipal Income Trust (VMV), which yields 5.4%. Their monthly dividends have been paid since 1995.

If you live in Pennsylvania, there is the Van Kampen Pennsylvania Value Municipal Income Trust (VPV), yielding 5.7%. They have had monthly dividends paid since September of 1995.

For a list of over 200 tax exempt stocks in an Excel that you can sort, change, and download, go to

Author does not own any of the above.

By Fred Fuld at

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