12 High-Yielding Monthly Distribution Bond ETFs

by on May 16, 2012 | Updated May 23, 2012 | ETFs Mentioned:

The hunt for yield continues to challenge investors of all walks in this historically ultra low-rate environment, although a certain breed of ETFs may offer a creative solution. Dividend investing is a staple strategy in any long-term portfolio and the evolution of the exchange-traded product structure has brought forth the benefits associated with monthly dividend distributions to ETF investors. While many ETFs make payouts annually or quarterly, there are several that pay distributions on a monthly basis. For those looking to collect a distribution twelve times a year, below we highlight 12 high-yielding monthly dividend-paying bond ETFs [see also Bond ETFs For Every Objective].

Each of the ETFs highlighted below has an annual yield of 5% or more at present, and makes payouts to investors on a monthly basis. For those who value a steady stream of cash flow, these bond ETFs could be an answer to the low yield puzzle [see also High Yield ETFdb Portfolio]:

Monthly Dividend Bond ETFs
Name Expense Ratio Annual Yield*
PowerShares CEF Compostive Portfolio (PCEF) 0.50% 8.25%
AdvisorShares Peritus High Yield ETF (HYLD) 1.35% 8.95%
SPDR Barclays Capital High Yield Bond ETF (JNK) 0.40% 6.25%
iShares iBoxx High Yield Corporate Bond Fund (HYG) 0.50% 6.06%
Van Eck Market Vectors High Yield Municipal Index ETF (HYD) 0.35% 5.74%
Van Eck Market Vectors Emerging Markets Local Currency Bond ETF (EMLC) 0.49% 5.55%
Guggenheim BulletShares 2015 High Yield Corporate Bond ETF (BSJF) 0.42% 5.54%
PowerShares Fundamental High Yield Corporate Bond Portfolio (PHB) 0.50% 5.44%
Guggenheim BulletShares 2014 High Yield Corporate Bond ETF (BSJE) 0.42% 5.36%
Van Eck LatAm Aggregate Bond ETF (BONO) 0.49% 5.18%
PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) 0.50% 5.14%
PowerShares Build America Bond Portfolio (BAB) 0.35% 5.05%
*As of 5/14/2012
  • PCEF: This ETF tracks a rules-based index which offers exposure to the performance of over 100 U.S.-listed closed-end funds.
  • HYLD: This actively-managed ETF targets the junk bond segment of the fixed income universe, seeking to provide investors with a high level of current income while also minimizing the risks associated with this asset class.
  • JNK: This ETF holds a portfolio of over 200 publicly issued U.S. dollar-denominated, non-investment grade, fixed-rate, taxable corporate bonds.
  • HYG: This fund offers even broader exposure to the “junk bond” universe, offering a portfolio of nearly 600 U.S. dollar-denominated debt securities.
  • HYD: This ETF is split up 75/25; the majority of the underlying holdings are non-investment grade municipal bonds, and the remainder are investment-grade triple-B rated municipal debt securities.
  • EMLC: This fund is designed to track a basket of bonds issued in local currencies by emerging market governments; top allocations by country include Poland, MalaysiaTurkey, South Africa, and Brazil.
  • BSJF: This one-of-a-kind bond ETF tracks the performance of a held-to-maturity portfolio of approximately 120 U.S. dollar-denominated high yield corporate bonds with effective maturities in 2015.
  • PHB: This offering differs from comparable junk bond ETFs by determining it’s underlying portfolio allocations based on a host of fundamental factors; the traditional market cap-weighted approach simply gives the greatest weight to the biggest debtor.
  • BSJE: This ETF is similar to BSJF, although it offers slightly less in the way of interest rate risk given its maturity date, and as such, it also offers a slightly less attractive dividend yield.
  • BONO: This ETF holds a portfolio of approximately 30 sovereign and corporate debt securities from Latin American issuers denominated in U.S. dollars, Euro, as well as local currencies; top allocations by country include Mexico, Brazil, and Colombia.
  • PCY: This ETF consists of approximately 60 liquid emerging markets U.S. dollar-denominated government bonds; the underlying portfolio is well-balanced and made up of debt securities from roughly 22 countries from all around the globe.
  • BAB: This ETF offers exposure to a portfolios of approximately 300 U.S. dollar-denominated Build America Bonds which are publicly issued by U.S. states and territories, as well as their political subdivisions.

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Disclosure: No positions at time of writing.