Sunday, June 12, 2011

6% Yield Stocks That Pay Monthly

What pays a yield of 6% or more, makes distributions monthly, is liquid, and has no minimum investment? The answer is monthly dividend closed end funds, also known as CEFs. Although technically not stocks, they are investment companies that hold high yield stocks and/or bonds and trade like stocks.

Some of the advantages to receiving monthly dividends as opposed to quarterly or annual dividend stocks include the fact that the invested capital is returned faster, compounding takes place more quickly, and there is generally less price volatility of the CEF. In addition, many of monthly dividend investments pay dividends that are tax free if they own municipal bonds in their portfolios.

According to the list that was recently updated at, there are over 200 different companies that pay dividends monthly, many of which have high yields, over 175 of which pay yields of 6% or more.

An example is the Calamos Convertible & High Income Fund (CHY), which pays a fairly yield of 7.3%. The management fee is on the high side at 1.13%. This CEF, founded in 2003, invests in high yield fixed income securities and convertible securities.

Another example is the MFS Multimarket Income Trust (MMT), which sports a yield of 7.8%. The stock trades at a slight discount to net asset value. The company, which has been around since 1987, has a management fee of 0.82%.

When choosing these investments, avoid the ones with high management fees, and also avoid the ones with low liquidity. Talk to your CPA if you invest in municipal bond closed end funds, in regards to the Alternative Minimum Tax. Try to chose the ones that trade at a discount to net asset value, and avoid the ones using excessive leverage.

To see the latest updated list of over 200 monthly dividend stocks, including many that have yields of 8% or more, go to Remember, very high yields may not be sustainable.

Disclosure: Author did not own any of the above at the time the article was written.


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