Let’s say you want to generate a middle-class wage using only dividends, but you’ve only got $300,000 to invest. Can it be done?
It certainly can — and it’s easy to do with just three funds you can buy right now.
Drop $300K into these three income generators and you’ll get an outsized 9.8% dividend stream. That translates into a steady $2,450 every single month. And since these funds pay dividends monthly (as opposed to your typical S&P 500 stock, which pays quarterly), you’ll start getting that income in just 30 days (or less) if you invest right now.
Best of all, none of these funds force you to buy into risky small companies, toxic financial derivatives or any other speculative investments. Just buy these funds with your preferred brokerage and look forward to your first dividend payout.
CEF Pick No. 1: A Bond Fund With a Massive 9.3% Payout
Let’s start with the Eaton Vance Limited Duration Income Fund (NYSE: EVV), a 9.3%-yielding corporate-bond fund that, as the name implies, invests in shorter-duration bonds. This means you’ll be exposed to any one company for a limited amount of time, which gives EVV’s management the freedom to shift from one firm to another if one starts to look more compelling.
And EVV isn’t investing in companies you’ve never heard of. With a portfolio holding a lot of mortgage bonds, EVV is well-positioned for America’s now-booming housing market. Meanwhile, its corporate positions include bonds from firms such as T-Mobile and Caesars Entertainment — companies whose cash flows are improving as America’s economy opens.
That’s why EVV is soaring.
EVV Starts ’21 Strong
Now let’s move on to …
CEF Pick No. 2: A 9.9%-Payer That’s Riding the Global Recovery
The Clough Global Opportunities Fund (NYSE: GLO) adds global diversification, along with its hefty 9.9% dividend. What’s more, that huge payout is growing, something many people will tell you is impossible with a dividend this large. But there it is:
A Huge Dividend, and Payout Growth, Too
Thanks to a strong total return (GLO has delivered 62.6% in price gains and dividends over the last two years), the fund has been able to boost its payouts by 23%. Its year-to-date performance is hinting at more hikes in the future.
Strong Return Likely Headed Our Way in the Form of Dividends
With a near 14% return in 2021 alone, GLO is crushing many foreign funds, thanks to a portfolio that’s smartly positioned for a reopening global economy: GLO’s biggest positions are in Micron Technology (Nasdaq: MU) and Samsung Electronics, which are both benefiting from the global microchip shortage, while it has also bought positions in Royal Caribbean Group (NYSE: RCL) and Carnival Corp (NYSE: CCL), heavily discounted cruise conglomerates ready to see their sales spike thanks to demand that’s been pent up for over a year.
CEF Pick No. 3: A 10.1% Dividend Fund That Profits as Rates Rise
Finally, we’ll add the Nuveen Credit Strategies Income Fund (NYSE: JQC), payer of a mammoth 10.1% dividend today.
Like EVV, JQC holds corporate bonds. But there’s a difference: JQC invests in adjustable-rate loans, which rise in value as interest rates climb. Why would we want to buy JQC now that interest rates are low, and the Fed has promised to keep them low for a long time? This chart:
JQC’s Strategies Pay Off
If we compare the total return JQC is getting on its portfolio (in purple above) to the performance of the index for these kinds of variable-rate loans (in orange), we see that JQC’s management team is outperforming by a huge margin. Yet JQC trades for less than its portfolio is worth.
JQC Is on Sale … but not for Long
With a 6.8% discount to net asset value (NAV), JQC trades for, essentially, 93 cents on the dollar. But that discount has been shrinking in recent months as floating-rate-loan investors look for better fund managers with whom to trust their cash. That’s led many to JQC, hence the shrinking discount — a trend that’ll likely continue.
A Soaring Return for Investors
With over a 22% total return (including dividends) on its market price in the last year, JQC is giving investors solid gains, in addition to its 10.1% dividend. Its price will likely keep rising as its discount closes, generating further upside to go along with that massive payout.