so here's the problem if you're a dividend investor typically two percent yields are what you
see in your everyday etfs in fact even the s p 500 has averaged a dividend yield of only two percent
but wouldn't it be nice to earn higher dividend yield well today we're exploring four different
type of etfs that yield anywhere from five to nine percent in dividend yields oh wait there's
an even better part they pay every single month in dividend distributions and yet again they're
actually a little bit different than what we've talked about on the channel before because they
are a representation of what we call closed-ended funds now typically closed-ended funds are an
investment that you buy directly into it's kind of like it's a mutual fund but today i have etfs that
hold a variety of closed-ended funds that can provide more options and a little bit less risk
sometimes now a lot of investors they go into closed-ended funds for the higher distribution
yields on top of that most cefs offer that monthly dividend payment which is a lot better than a
typical etf that will maybe only pay you once every quarter so before i get to these four etfs
i think it's important to discuss what actually is a close-ended fund what does that mean and
how is that different from the typical open market the etfs the stocks and everything else that you
might be used to buying now of course if you are already familiar with close ended funds and you
want to jump right to that top four etfs that i'm recommending with that five to nine percent yield
jump to this time stamp right here otherwise if you want to understand it because there are some
important things to know stay tuned so we'll do this just like we always do our versus videos over
here we'll talk about these close-ended funds these new things that we're talking about on
the channel today and over here we'll talk about the open-ended funds and these are the ones that
you're probably most familiar with your etfs your stocks things like that i think this is the
primary difference and we'll get right to it right to the point over here open-ended funds typically
always allow new buyers whereas close-ended funds and the reason they're called close-ended
is they have a limited amount of shares and their goal is because they're not always
accepting capital they're trying to initially raise capital for an ipo ipo being an initial
public offering this means with a closed ended fund because they're limited in shares
they are not going to continue to offer more shares so for example in an open-ended market
you and i buy shares and we keep buying and then some other people over here start buying and
some other people over here start buying they keep issuing new shares as more demand and more buying
occurs in the market but a close-ended fund once all of their shares are bought up let's say they
only offer unrealistic but 100 shares once all 100 shares are bought they're not offering any more
shares at all the only way to buy shares in the future of this particular close ended fund is if
somebody sells them let's say they sell two shares of the 100 shares well then those two shares are
out in the open market for you to buy but once you buy them it's on a standstill until somebody else
sells out in the close-ended fun but that also comes with its own little thing to think about
you know with an open-ended fund they have to have cash available because you may decide at
any moment to sell your shares and if you sell your shares they need to be able to pay you
and buy back the shares close-ended funds don't buy back shares it just goes to the open market
doesn't mean you can't sell your shares if you own cefs it's just that the company themselves do not
have to pay you back whereas these guys over here they have to pay to buy back your shares when you
want to sell them that means it could be anywhere from about eight to ten percent cash on hand of a
particular etf they're not going to invest their entire 100 percent of the capital that they raise
into the different various investments which means that not all 100 percent is invested whereas in a
closed-handed fund every single dollar typically that they make gets invested into their growth
now with an open-ended fund they'll use their net asset value as a means of calculating what their
real market is based on their investments held by the fund close-ended funds trade throughout the
day in the stock exchange now what this actually means is that its market driven price may differ
from its net asset value this means a cef can trade at a premium meaning more than its nav or a
discount meaning less than its naf so a cef's fund their market price may actually be driven higher
than their nav based on let's say it's a sector that people are most interested in so investors
are kind of flocking to that maybe it's technology or something of that nature or there's a fund
manager over that cef that is well respected so they're getting a lot of influx of cash on the
inverse of that you could have something that maybe is underperforming and investors are a
little bit scared of it they're saying hey that's a bit risky i'm staying away from it
so therefore it's at a discount to it snap meaning it's trading less than its net asset value what
all this means for beginners close-ended funds can be a little bit more volatile than the open market
just something to keep in mind now one thing that both of these sides have in common are fees oh
yes they come with the fees the expense ratios and everything else that you're typically used to when
you buy into etfs and mutual funds and things like that most close-ended funds are actively managed
so they will come with a rather high expense ratio in fact sometimes an absolutely insane
expense ratio but the trade-off to that should be that they are actually distributing about up to 90
of their net income in the form of dividends and distributions so really you got to do your
own calculation to see if the expense ratio versus the dividend makes it worth it or not speaking of
that 90 to remain as tax-free as possible what they do is they pass that tax burden on to us
the shareholders in a closed-end fund so because that tax burden is passed on to the shareholders
you may be hit with an unnecessary tax bill so make sure you're doing your own calculations
to make sure that you're taking the best advantage of the tax based on your financial situation
and that brings us to the top four etfs that are focused on closed-ended funds that pay
very very nice percentages of dividend yields and they pay every single month so let's start with
the lowest yield and we'll climb our way up to the number four which is the highest paying dividend
yield this could be a great way to diversify your portfolio get some extra income going on get some
extra dividend yield here is number four and that is ticker symbol f c e f it pays a 5.1 dividend
yield pays around nine to ten cents per share per month so it currently goes for twenty five dollars
and nineteen cents per share as of the recording of this video and if you think about it a 10 000
initial investment when the fun started in 2017 would be worth 15 861 dollars today with dividends
reinvested and that represents an overall return of 10.2 percent over that period of time not
too bad because there is actually a recession in that in march 2020 so it's nice to see an overall
growth of 10 even with that downturn now brace yourself this expense ratio comes in at 2.91
whoa that's high but it's to be expected with close ended funds and remember because they're
actively managed and that's the trade-off for that high income with the high expense as i mentioned
earlier this fund holds 50 close-ended funds with 4.27 of the holdings going to the ev tax advantage
global dividend incorporated now let's move on to the next one at a 6.6 dividend yield and that
is ticker pc ef this one pays around 13 cents every single month per share that you own and it
currently goes for 24.19 per share now taking your 10 000 initial investment if you would have done
the same thing with pcef with the fund starting in 2011 this would now be worth a whopping 21
433 today representing a 7.35 total return now this fund holds a total of 128 close-ended
funds with the top holding as the ev tax managed dividend equity income fund the expense ratio for
pcef it's a little bit cheaper than the one previously at 2.34 expense ratio let's move
this up a little bit let's move this up to an 8.8 dividend yield and that is with tinker symbol why
why why it's currently going for 17.7 cents per share and this fund is paying out 12 to 13 cents
per month per share not too bad the fund holds 46 close-ended funds with the most invested in
oxford lane at 3.4 percent back to our initial 10 000 investment if you would have made this in yyy
when the fund started in 2013 today it'd be worth 16 514 representing a 5.9 return
kind of the lowest compared to the other two that we just mentioned but as you can see a
higher dividend yield sometimes represents a lower overall return the expense ratio for this one 2.45
but now ladies and gentlemen or according to my youtube analytics ladies and gentlemen the
9.1 percent dividend yield is ticker symbol c-e-f-s close-ended fund c-e-f-s hey that's
easy to remember isn't it 9.1 percent fund is trading right now for 21.76 per share
paying out 14 cents per share per month every single month that fund holds 44 close-ended funds
with the top being the five-year treasury note that's kind of interesting an initial ten thousand
dollar investment with this fund starting in 2018 would be worth 13 576 representing a nice 8.46
growth expense ratio on this one is a whopping 3.8 percent so this one is obviously the king
of expense ratios uh as opposed to everything else that we just looked at
but the nice thing about these four etfs is that they represent the closed-ended fund environment
so cefs when you're buying them directly can be a little bit more risky so why not own
a basket of cefs in the etf format that's the beauty of the four that we explored today
if you're into this type of thing with dividend investing now the next thing you need to do is
check out this video for a 10 dividend yield and then this one on how you can make 1 000
per month in dividends and until next time we'll see you on the next video.