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 5 Monthly Paying Retirement Funds

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Most dividend stocks and funds pay their dividends quarterly (every three months).

However, many investors, especially those relying on dividends to help fund their retirement, prefer monthly payouts that provide a steady and predictable income that better matches their regular expenses.

Fortunately, many closed-end funds (CEFs) that pay dividends, pay them monthly. If you’re rusty on your the terminology; unlike conventional (open-end) mutual funds that create new shares as needed, CEFs issue a fixed number of shares at the IPO, and after that, those shares trade on the open market just like stocks.

As a result, CEF share prices vary with supply and demand and typically trade at a discount (below) or premium (above) their net asset value (per-share value of holdings). Although many trade at 5% to 10% discounts, outperforming funds, or those focusing on currently hot categories, trade at premiums.

With that in mind, here are the five best CEFs that qualify, at least in my view as “retirement suitable” funds. To make my “retirement suitable” list, a CEF must pay monthly dividends equating to a 6% or higher dividend yields. My “five best” funds are those that have generated the highest total returns (share price appreciation plus dividends) over the past 12-months. Here’s the list.

Calamos Global Dynamic Income (CHW). 

Has returned 28% over the past 12-months and 13%, on average, annually over the past three years. It pays $0.07 per share monthly, which equates to a 9.1% dividend yield. It holds a mix of mostly U.S.-based common and preferred stocks, and investment and non-investment credit rated corporate securities. It recently traded even with its net asset value.

Eaton Vance Enhanced Equity Income Fund II (EOS).

Returned 23% over 12-months and averaged 12% annual returns over three years. It holds U.S.-based common stocks, overweighting technology (34% of portfolio), The fund uses a covered call strategy to generate income. Pays $0.0875 monthly dividends equating to a 6.6% annual yield, and recently traded even with its net asset value.

PCM Fund (PCM).

Returned 22% over the past 12-months and averaged 13% annually over three years. Holds mostly mortgages secured by commercial real estate properties, but also holds corporate bonds. Pays $0.08 per share monthly dividends (8.3% yield). Recently traded at a 12% premium to its net asset value.

Eaton Vance Tax Advantaged Global Dividend Opportunities (ETO).

Returned 21% over 12-months and averaged 10% over three years. Holds a mix of U.S.-based and global common and preferred stocks, overweighting financials. Pays $0.18 per share monthly dividends (8.4% yield). Recently traded at 6% premium to its net asset value.

Pimco Corporate & Income Opportunities (PTY).

Returned 20% over 12 months and averaged 15% annually over the past three years. Holds a mix of corporate bonds and securities secured by residential real estate. Pays 0.13 per month, which equates to a 9.1% dividend yield. Recently traded at a 17% premium to its net asset value.

As always, consider these funds to be research candidates, not a buy list. The more you know about your investments, the better your results.

published 4/20/18

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