Market Pulse: Receiving monthly income
Many retirees need consistent monthly income from their investments and in today’s near-zero interest rate environment that is difficult.
Nevertheless, there are opportunities for those willing to accept some risk. Here are four securities that pay monthly dividends.
Global X SuperDividend ETF (SDIV). Global dividend payments topped $1 trillion last year. The SDIV exchange-traded fund (ETF) takes advantage by placing an equal percentage in 100 global dividend-paying stocks.
U.S. securities account for 23 percent, Australia accounts for 20 percent of the holdings, and the U.K. accounts for 10 percent. SDIV yields 6.1 percent and nearly half of the payments are qualified dividends.
SPDR Short-Term High Yield Bond (SJNK). This ETF invests in high yield (i.e. “junk bonds”) fixed-income securities. The average duration in its portfolio is only 3-1/2 years, which somewhat insulates this fund from rising interest rates.
SJNK has been remarkably stable. While its price dropped to $29.50 last June, its current price of $30.85 is unchanged from a year ago. Meanwhile, it yields 5.2 percent.
Armour Residential REIT Preferred 7.875 percent Series B (ARR.B). Most REIT preferreds pay quarterly dividends. Armour’s is an exception. The company invests in adjustable residential mortgage-backed agency debt. Its stock recently jumped when the company accelerated its buy-back program.
While one could buy Armour’s common stock, which yields 14 percent, a much safer play is this preferred. The Series B preferred yields 8 percent and is not callable until 2018. It’s dividends are not qualified.
AllianceBernstein Global High Income Fund (AWF). This closed-end fund invests primarily in lower-rated corporate debt securities from developed and developing countries.
While securities from the U.S. account for 63 percent of the portfolio, 95 percent of the holdings are dollar denominated. AWF yields 8.2 percent.
What’s the downside? These securities will lose value if the economy slows or if interest rates rise because of inflationary pressures or Fed actions.
Nevertheless, it’s not investing if there isn’t some risk. There are still ways for investors to receive a 5 to 8 percent return. Now you know of five.
David Vomund is an Incline Village-based fee-only money manager. Information is found at http://www.ETFportfolios.net or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial adviser before purchasing any security.