6 Monthly Dividend Mutual Funds That Pay 5%-Plus to Buy Now
By: Olivia Faucher,
While exchange-traded funds (ETFs) continue gaining popularity, investors still seek diversification and steady income from other investment vehicles, like the five monthly dividend mutual funds described below, all of which yield more than 5%.
Still, investors must consider other financial measures, as high yields can be deceptive on their own. A high dividend yield could be caused by a rapidly declining share price in advance of a dividend cut or elimination. Therefore, investors must consider additional metrics before deciding which dividend paying mutual funds to add to their investment portfolio.
To ensure that a mutual fund or any other security offers capital gains and dividend income distributions, investors can simply use the total return over a set period. As long as the total return over the desired time period exceeds the dividend yield over the same period, the equity’s capital gains will be positive, and the equity is worth consideration for further analysis.
In addition to current yields of more than 5%, the following mutual funds made the list because they have relatively low expense ratios, and they provide a reliable monthly dividend that has withstood the negative impacts of the recent financial crisis.
6 Monthly Dividend Mutual Funds That Pay 5%-Plus to Buy Now: #6
JP Morgan Income Fund Class I (NASDAQ: JMSIX)
Dividend Yield: 4.2%
JMSIX is a taxable bond mutual fund that invests opportunistically in a wide variety of debt securities that have high potential to produce attractive risk-adjusted income and have low correlations to each other. The fund tracks the Bloomberg Barclays U.S. Aggregate Index as its benchmark. The fund utilizes a flexible approach, allowing allocation shifts based on changing market conditions.
The fund primarily invests in US bonds, making up the vast majority of the fund’s composition. These bonds are split primarily between Agency MBS (14.4%), Asset Backed Securities (16.8%), CMBS (25.9%) and Corporate High Yield (28.3%). The remaining investment is dividend into cash, Corporate Investment Grade, EMD USD Debt, and Non Agency MBS.
JMSIX is currently paying out a monthly dividend of $0.039, which correlates to an annual payout of $0.468 and a dividend yield of 4.2%.
The current stock price of JMSIX is , with a net expense ratio of 0.42%. The stock price is in line with the recent trend, as the price has been in the $9 range for the past five years. Dividend distributions and asset appreciation have combined over the past five years to deliver a return of 14.6%.
6 Monthly Dividend Mutual Funds That Pay 5%-Plus to Buy Now: #5
Columbia Multi-Asset Income Fund Class A (NASDAQ: CLNAX)
Dividend Yield: 4.2%
CLNAX is an asset allocation mutual fund that invests in a diversified set of income-generating asset classes to offer multiple drivers of income and return. The fund adapts to changing market conditions in an attempt to generate attractive income while managing volatility and downside risk. The fund’s top assets are primarily made up of equity-linked notes, high-yield corporate bonds, and U.S. treasuries.
CLNAX holds $164 million in total net assets. Over half (55$) of this money is invested in bonds, with the remained 45% split between stocks, preferred stocks, convertible bonds and cash. Although the fund is well-diversified, its most heavily weighted industries are financial services, real estate, healthcare and technology.
CLNAX began paying a monthly dividend upon its inception in March 2015 and has consistently paid a dividend ever since.
The current price per share of CLNAX is , which is in line with the 5-year trend that the fund price has followed. The price fell to a low point of $7.59 in March 2020 at the height of the financial crisis but has since recovered to land back in its consistent $9 range.
6 Monthly Dividend Mutual Funds That Pay 5%-Plus to Buy Now: #4
BlackRock Dynamic High Income Fund Class A (NASDAQ:BDHAX)
Dividend Yield: 5.6%
This fund seeks returns by tracking the makeup and performance of the MSCI World Index (70%) and the Bloomberg Barclays US Aggregate Bond Index (30%).
The BlackRock fund currently holds a larger share of funds in fixed income asset classes compared to its benchmark indices, which favor equities. The largest discrepancy is in the Non-U.S. Fixed income category where BlackRock holds over 14% of its total assets.
Geographically, more than 75% of the BlackRock fund’s holdings are in North American securities. Emerging Markets represent the second-highest segment with nearly 8% of assets. The rest of the fund’s assets — approximately 5% — is in cash.
The fund’s monthly distribution amount corresponds to an annualized payout of $0.51, which is equivalent to a 5.6% dividend yield. In addition to monthly dividend payouts, the fund has provided total returns of 12.8% over the past five years.
Since a drop in price during the pandemic and the turbulent economic times following, the price has been steadily increasing to reach the current price of
5 Monthly Dividend Mutual Funds That Pay 5%-Plus to Buy Now: #3
Victory Floating Rate Fund Class Y (NASDAQ: RSFYX)
Dividend Yield: 4.6%
The investment seeks to provide a high level of current income. The fund normally invests at least 80% of its assets in floating rate loans and other floating-rate investments.
RSFYX currently has nearly $2 billion in net assets. The majority of this massive portfolio is invested in US Bonds, accounting for 94.4% of asset allocation. The remaining 6.6% is invested entirely in Non US Bonds. The sectors these bonds represent are diverse, with no individual sector accounting for more than 25% of the fund’s holdings.
The fund pays out a monthly dividend of $0.04, resulting in an annual payout of $.47. This correlates to a current dividend yield of 4.6%. In addition to a reliable monthly dividend payout, the fund has returned 14.7% returns over the course of the last 5 years.
The mutual fund is currently trading at , which is lower than the high $9 range that the fund has been in for the past 5 years. Now could be an opportune time to buy RSFYX, while the share price is slightly depressed, as it may yield increased returns.
6 Monthly Dividend Mutual Funds That Pay 5%-Plus to Buy Now: #2
Barings Emerging Markets Debt Blended Total Return Fund Class Y (NASDAQ: BXEYX)
Dividend Yield: 7.9%
The Fund invests in debt securities, derivatives and other instruments that are economically tied to emerging market countries. Under normal market conditions, the fund will invest at least 80% of its net assets in securities, fixed income securities, or debt instruments of emerging market countries. The fund seeks to achieve maximum total return for its investors.
Most the fund’s $67 million holdings are invested in Non US Bonds. BXEYX has a unique strategy of betting against US Bonds to increase their investment in foreign fixed income assets. As a result, the fund’s information sheet will show it has 163.6% of its assets invested in Non US Bonds, and -71.7% invested in US Bonds.
BXEYV currently pays a dividend of $0.04 per month, annualizing to $0.48 in dividend distributions a year. This gives the fund a dividend yield of 7.9% — although impressive, this yield is slightly inflated due to the recent drop in share price the fund has experienced over the last year.
The price per share of BXEYX is currently , considerably lower than its historical range. This makes the fund a risky but potentially high-paying investment due to its depressed share price.
5 Monthly Dividend Mutual Funds That Pay 5%-Plus to Buy Now: #1
PGIM High Yield Fund Class Z (NASDAQ: PHYZX)
Dividend Yield: 6.28%
This mutual fund seeks to maximize current income by investing primarily in high-yield bonds.
Capital growth is a secondary goal for the fund. The fund may be appropriate for investors willing to take on higher risk to achieve higher current income and potential capital appreciation.
The fund holds a whopping $20 billion in assets and invests nearly 80% of this in US Bonds. The remaining investment is split mostly between Non US Bonds and cash.
The fund has been paying a monthly dividend since 1996. The current monthly dividend payout of $0.03 results in an annual payout of $0.31. In addition to the benefit of the reliable monthly dividend, the fund has provided a total return of 16.7% over the last 5 years.
The fund has typically hovered above the $5 range but has dropped by 9% in 2022. It currently trades at a discounted price of .
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Olivia Faucher is an investment writer intern at Eagle Financial Publications who writes for www.dividendinvestor.com.
