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Old 02-20-2015, 10:40 AM   #21
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Originally Posted by Running_Man View Post
DNP 70 % Utility stocks 15% bonds and 15% MLP's trades at a 4 % premium but has managed to pay out 6.5 cents per share every month since 1997 and is a very nice paying conservative fund for this purpose.
11.5% of the 2014 payout was "return of capital."

Tax Information: http://dnpselectincome.com/uploads/c...etter_2014.pdf

http://www.dnpselectincome.com/uploa...ionplan-qa.pdf
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Why is the Fund implementing a Managed Distribution Plan at this time?

Answer:

For the past several years, less current income has been earned on the Fundís traditional investment holdings because interest rates have been at historically low levels, utility common stock dividend yields have been well below their long-term average, and income earned on the Fundís leverage, while still beneficial, has dropped. Consequently, there has been a smaller amount of current income available to distribute to shareholders.... The Fundís monthly distributions to shareholders may include short- and long-term capital gains and/or a portion of nontaxable return of capital in order to maintain the distribution rate.
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Old 02-20-2015, 10:46 AM   #22
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Both my thoughts and the discussion led me to clearly write down all the dividend paying stocks I currently have (many I have had for years) to see what the monthly income stream looked like today. It varies from 600-1600 a month of dividends (both ordinary and qualified). And that analysis shows Jan is the lightest month. So I am already in pretty good shape based on my spending. As this is only a portion of my assets (and I do not have any of my 401k/IRA in this calculation) I will look at some further dividend pay stocks to put the recent ESPP gains to work for ER and leave the rest as is and withdraw as needed. Ultimately since there are different accounts involved it might look a bit more like what you do W2R. Again part of this is the change from having that regular paycheck to none...OTOH so far this year I have had nearly a zero paycheck since I have max'd out my 401K contributions and I haven't really noticed so....
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Old 02-21-2015, 11:25 AM   #23
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I do not understand the point of this post, I took it as a negative that DNP is not "earning" what they pay in dividends? While the fund paid out in 2014 78 cents or 8.5% of the NAV at the start of the year, it's actual performance was far in excess of that, and in excess of the S&P 500's 14% for 2014 as well.
11.5% of the payout is about 9 cents of the 78 cents of payout and payout of capital is to be expected from time to time.

If there are unrealized capital gains, this would be the most tax efficient way of paying income to an income seeker in an effort to keep taxes to a minimum no? At the start of 2014 the NAV was $9.20 though the fund was selling at $9.80, it ended the year at $10.56 with a net asset value of $9.80. Present NAV is $10.05, after 13 cents of year to date distributions.

Since 1997 when it embarked on this strategy, paying out 9% of the present market price at the time of $8.63 it has paid for 18 years at that rate, and still have the market price rise 22% after that, it is quite a feat to be able to successfully manage that through the turbulent times of 1999 - 2003 and 2008 - 2009 without affecting distributions and I think that steady payout holds value in stopping many people from panicking and selling when they would have to sell shares to fund retirement with their stock portfolio down 50 percent. While the S&P 500 fund averaged 7.6% over the past 10 years DNP has averaged 7.9% while managing the monthly payouts as well, I think quite highly of this company and what they have accomplished. I realize there are Utility index funds that can be shown to have earned 9.0% in that time frame. I believe there is real value in being able to show nervous investors that their income can be maintained in a monthly payout ratio and that their payout will be earned over time.

9% is far more than a distribution rate I could ever recommend, but I think DNP has shown it is possible to maintain this straight distribution. Had a retiree in 1997 retired and invested one million dollars in DNP and spent the Trinity $40,000 through the year and adjusted that spend forward for the average inflation per US government and then each Dec 31st reinvesting the difference between spend and actual distributions from DNP, the retiree would have started with $90,383 in distributions and buying 5,838 more shares the first year. That retiree after 18 years of withdrawals would now have withdrawals of $60,359 for 2015 but total shares now would be 160,008 for total distributions of $220,367 and a market value of investments after all withdrawals would be $2,966,481. I realize this does not include taxes but tax rates are extremely individualized.

If our retiree had decided to be very aggressive taking a large risk on have to cut inflation adjusted spend in the future for the sake of the present and take six percent or $60,000 in withdrawals, the withdrawals would now be $90,359, distributions $149,396 and portfolio still would have doubled to $2,011,096 for a decline in the withdrawal rate to a more reasonable 4.5%.

If you look more near term at a 2007 retiree taking $40,000, original distributions of $72,222 would now be $99,103 while withdrawals are now $46,932 and the portfolio would have a value of $1,334,083. At $60,000 in 2007 current withdrawal would be $70,398 with distributions of $79,446 and a portfolio value of $1,069,462.
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Old 02-21-2015, 12:32 PM   #24
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For a fund this should not be an issue should it? They are doing the allocation of funds and paying out monthly as a convenience, the key would be I think the expense ratio.
Very good point regarding open end funds. My attention and comment apply only to securities that are traded in auction markets. These are subject to the issues that I mentioned. Regarding expenses, I don't know how much extra it might cost to pay monthly rather than quarterly. It must be something.

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Old 02-22-2015, 12:44 AM   #25
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You also could consider immediate annuities for guaranteed (by the insurer) monthly income for a portion of your income needs.


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Old 02-24-2015, 12:04 AM   #26
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I've never thought of this needing a monthly income as an issue.

My brokerage accounts all have various stocks and etf's and maybe a fund within them. The dividends pay out and collect as cash in the account.

I just transfer out the needed money, so to simulate a monthly income, I'd just take out X amount each month, after figuring out what the avg available cash would be.

That way Bonds could be kept in the IRA/ROTH accounts and just stocks in the taxable account.
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Old 02-24-2015, 08:22 AM   #27
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Same here. When I retired I just tweaked my AA to include more cash and less fixed income and my monthly income is a transfer from my cash to my local bank accunt that I use to pay my bills... total return or bust!
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Old 03-10-2015, 04:25 AM   #28
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For those looking for safe monthly income...
Note: If the rates rise this fund will suffer.

Vanguard GNMA Fund Admiral Shares (VFIJX)

This bond fund specializes in government mortgage-backed securities. The fund primarily invests in GNMA securities, which are backed by the full faith and credit of the U.S. government and typically offer a higher yield than U.S. Treasuries.

Expense ratio 0.11%
SEC yield 2.74%
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Old 03-10-2015, 08:06 AM   #29
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Avoid them:
(1) You may not get 15% QDI.
(2) The dividend is not constant and can go down.
(3) None of them have good long term track records.

Instead buy dividend champions that pay dividends in different quarters to obtain a monthly income stream.
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Old 03-11-2015, 08:01 PM   #30
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DIA pays monthly a dividend.
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Old 03-11-2015, 09:14 PM   #31
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O A Dividend Paid Monthly | The Monthly Dividend Company | Realty Income pays a dividend monthly. http://www.dividend.com/dividend-sto...y-income-corp/ Many say that REITs are pricy at the moment and there is no way I would recommend anyone put all their income investments in one stock but this stock should be on your 'to consider' list.
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