Bond ETFs

This High-Yield Municipal Bond Fund Provides Monthly Payments

There are many securities on the market that can pay dividends every month, though not as many are exchange-traded funds (ETFs).

One fund that will allow investors to collect monthly paychecks is VanEck Vectors High-Yield Municipal Index ETF (HYD). This fund’s name makes its objective quite clear.

HYD allows investors to own a basket of U.S.-dollar-denominated, high-yield, long-term bonds. Its performance thus can be expected to correlate with the U.S. bond market and may make this fund an attractive option for investors looking to diversify away from stocks.

This fund’s expense ratio is a middling 0.35%. The yield is generally around 4%. It currently has $3.5 billion in assets under management. It currently trades at a small premium to net asset value.

Like many bond funds and assets, HYD is not a volatile security. It is up 4.57% in the past 12 months, moving in a slow but steady pattern. Performance over longer periods is not much better but includes more dividend payments.

This fund’s holdings are all various municipal bonds. No single holding constitutes more than 1% of the portfolio at this time, and these municipal bonds may not be easy for investors to acquire without the use of ETFs.

If your portfolio could use some diversification into U.S. bonds, VanEck Vectors High-Yield Municipal Index ETF (HYD) offers one possible way to achieve this worthy goal.

As always, I recommend that you perform due diligence on your own to decide if the objectives of the fund fit your personal investment goals and willingness to accept risk. The fund’s unique characteristics make it worth considering, especially if you like the idea of monthly income from municipal bond funds.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.