Mutual funds and exchange-traded funds saw significant inflows of capital in 2021, this is according to recent metrics released by the Investment Company Institute. “Total estimated inflows to long-term mutual funds and exchange-traded funds were $16.30 billion for the week ended August 4,2021.” The recent pandemic taught many people to think carefully about financial planning. In times when financial needs are pressing, often unexpected and unwanted, you will need to generate cash. The two ways to generate cash from your portfolio when needed is to withdraw cash from dividends or to sell shares of securities that you own.
To sell the shares you would need securities licenses. If you hold multiple types of assets, this could be used to reduce the chance of having to sell something at a loss to raise cash in times of need. Or, you could invest in dividend-paying stocks that pay a regular income. This article will explore three large dividends that pay a monthly income for your retirement base.
Using Monthly Payers for Your Retirement Base
By investing in dividend-paying stocks that pay you a regular income, you will be able to build a portfolio which allows you to remove what you need while reinvesting the remainder. To prevent having to sell positions from your portfolio, this method allows you to add them or maintain the same amount if all the income is needed. This sustainable cash flow offers portfolio owners the opportunities to decide how to reinvest, where to invest the remainder or how much they need to pay expenses. This financial freedom will make retirement much less stressful. Seeing that most expenses need to be paid once a month, having a monthly dividend payer provides peace of mind and makes settling expenses easier. Finding the right monthly payer may seem like an intimidating task, therefore it is necessary to research your options before settling:
PIMCO Corporate & Income Opportunity Fund (PTY) – Yield 7.3%
PIMCO Corporate & Income Opportunity Fund (PTY), a PIMCO closed-end fund, is known to provide a monthly dividend no matter what is transpiring in the market. PTY actively trades in the bond markets. The team of researchers at PTY buys and sells bonds, invests and identifies opportunities before the general market identifies them. This successful strategy is due to the successful management of the closed-end fund. PTY was formed in 2002 and has produced an average annual return of almost 14%.
Cohen & Steers REIT & Preferred Income Fund (RNP) – Yield 5.6%
Cohen & Steers REIT & Preferred Income Fund (RNP), one of the best Property REIT closed-end funds available, has an objective to gain a high current income and a secondary objective to gain capital appreciation. RNP invests in real estate and diversified preferred securities to achieve this.
The fund invests in US positions, but does have 20% of their investments in preferred securities of non-US companies. The fund allows you to have REIT and preferred exposure in one fund. Income-focused investors will find this extremely useful because both of these security types provide cash flow. Their impressive history is due to Cohen & Steers being one of the best managers in the REIT sector. By overweighing solid REITs and taking advantage of unjustified pullbacks, Cohen & Steers is able to maximise the returns of their shareholders. RNP has successfully managed their portfolio by having their net asset value up about 9% from the beginning of 2020 and has fully recovered from the pandemic. Their net asset value has increased by almost 18% over the past 5 years, and has increased by 60% over the past 10 years. Impressively, their distribution has never been cut as well.
Tekla Healthcare Opportunities Fund (THQ) – Yield 5.6%
Tekla Healthcare Opportunities Fund (THQ) has a portfolio composed of large domestic and international healthcare companies. They also have exposure to fixed-income securities holding corporate bonds of both U.S. and international companies, mainly in Europe, Japan, and Australia. Some of the fund’s largest holdings are well-known companies such as Johnson & Johnson (JNJ), UnitedHealth Group (UNH) and Medtronic PLC (MDT). Due to the fact that healthcare companies provide necessities, they are recession and inflation resistant. This is because the services and products they offer are necessary for the public to have a minimum standard of living or enjoy a healthy life, even in times of inflation and recession.
THQ is a good choice for income-seeking investors who are interested in diversified healthcare and pharmaceutical exposure. THQ’s top 10 holdings pay dividends but at a rate lower than their annual yield. Their distribution policy, which pays $0.1125 monthly distribution to their investors, is paid in cash and makes it possible to be used for dividend reinvestment. The net asset value has increased over 25% since the start of THQ in 2014. This proves that the distribution is well covered.
The Bottom Line
The three mentioned funds have a balance sheet and cash flow, and these support the dividend. The monthly payments are able to be used to pay the expenses of the investor and can be used to purchase dividend-paying securities.