Investors want their money now ? and many companies are working to do that.
A newly popular trend among the baby boomer generation that is on its way to retirement is stocks, bonds, mutual funds and CDs that pay out monthly dividends. While most publicly traded companies pay out quarterly dividends to shareholders, investments that issue a monthly return are developing a niche in the market.
And the desire for a check every month is an option many retirees go after.
“The easiest way is to find mutual funds that are in the niche of a municipal bond fund or an income-generating fund in high-grade corporate bonds,” said Thomas Taylor Jr., a certified public accountant and member of the National Association of Personal Financial Advisors. “What we have done is taken that a step further, and we have access to banks that are offering CDs that pay monthly dividends.”
A nine-month CD is good for about a 5 percent monthly dividend, Taylor told The Examiner. From this monthly profit, investors can take that dividend and elect to either reinvest it or make a small profit.
Some investments giving out the highest monthly dividends are Harvest Energy Trust (17.7 percent), Canetic Resources (16.7 percent), Pengrowth Energy Trust (16 percent) and PrimeWest Energy Trust (13.5 percent), according to Stockpickr.com.
However, it is always important to remember to diversify a portfolio, no matter what types of investments are being made.
“Up until now, many people stand around the water cooler and pick funds like it?s Monopoly money,” said J. Michael Martin, chief investment officer of Financial Advantage Inc. “All of a sudden, you wake up one day and it?s not Monopoly money. It?s serious.”
Just like any investment, there are certain things to look for when choosing the right stock, fund or CD. One detail to pay attention to is whether an investment will pay back part of a return with the dividend.
This means that it repays a fraction of the initial investment as part of the dividend to make investors think the monthly payout is high, while it is actually giving them back their own money.
