5 Monthly CEFs for Retirement Cash Flow — No NAV Erosion

Closed on funds can be attractive in retirement because many of them pay high monthly distributions, but that income isn't always as good as it looks. Some funds will keep paying big distributions even when their portfolios aren't earning enough to support them, effectively returning some of your own capital and slowly eroding NAV over time. So, I screened for closed on funds that have preserved their NAV over the past decade while still paying generous monthly income. All five yield around 7% or more, and three have even raised their distributions this year. And this video will look at each fund strategy, performance, valuation, and distribution safety to see which ones may be worth considering for retirement income. I'll be using Simply Safe Dividends to analyze these funds. If you're not already a member, you can try the site for free for a full month using the link below to check your portfolio's dividend safety and also to find more income ideas. No credit card required. First up is the Edenvance Enhanced Equity Income Fund number two, ticker EOS, with an 8.5% yield. EOS is a covered call closedend fund. So it owns a group of stocks about 50 holdings in this case mostly large cap growth names like Nvidia, Alphabet, Apple, Broadcom. Those are all pretty significant weights in this portfolio which tracks the Russell 1000 growth index and then the fund will sell call options on about half of its holdings. Uh those options expire within a month and are sold out of the money. So the fund does retain some upside exposure with this partial overwrite and again using out-of-the-oney options, but it is giving up some upside in exchange for current income today from the options premium which can provide a little downside protection but not a whole lot when half of the portfolio is in tech. Uh that makes for some volatility which impacts the dividend that we'll talk about in a minute. But the fund has successfully grown NAV per share over the past decade. It's gone from about $15 to $25. And this chart here is showing why that's taken place. So this blue line is the fund's current NAV distribution rate or how much of the portfolio is getting paid out as distributions about 7.7%. To sustain that distribution and grow NAV, you have to have investment returns that are exceeding that payout rate. And that's exactly what EOS has done. It's generated about a 13% annualized return from its portfolio over the past decade. So it's been able to grow NAV while paying pretty generous distributions throughout that time period. The fund also doesn't use any leverage which is a plus but not super unique for an equity focused CF. However, you can see here that there is volatility right in 2022 when rates were being increased tech stocks sold off hard and that really hurt EOS. It fell from about 25 a share to 15 a share the portfolio value and as that portfolio shrunk that hurt the dividend. So, right after the pandemic, when growth stocks were soaring, rates were low, management cranked up the payout by about 40%. But had to give about half of that back after 2022 slump to preserve the portfolio's value. So, that is something to be aware of, and it's one reason why we give this fund a borderline safe dividend safety score. You should expect some near-term volatility depending on what happens with growth stocks. But due to management's partial options overwrite and focus on preserving some capital, I think over the long run, it's likely that NAV remains stable to hire uh with some pretty good dividends along the way. Taking a quick look at valuation here, the fund is actually trading at a notable discount to NAV, about a 10% discount today. That's uh bigger than its 5-year average of a 3% discount. And there are some periods where the fund even traded at a premium to NAV. So you're basically getting the portfolio at a 10% discount. But your future returns are going to be dictated by what happens with these large cap growth stocks. They've had a a really good run. Even though EOS has sold some call options, limiting some of its upside, its total returns over the past decade have still beaten 84% of all equity closed end funds and volatility has been slightly lower. I also like that this fund has an expense ratio that's on the low side for CFS. a lot more than you're going to pay for a passive index fund, but at least this strategy is doing something a little unique and has a pretty decent long-term track record. Again, you have to be a believer in large cap growth stocks continuing to outperform. Your guess is as good as mine with the future holds there, but EOS is a pretty good one if that run continues while paying that nice dividend and likely to preserve capital. U given all those factors to consider. Next up is the Reeves Utility Income Fund, ticker UTG, with a 6.7% yield. UTG is the most popular closed on fund out there, largely due to its track record of delivering stable to rising distribution since it was launched in 2004. Over a dozen payout hikes during that time, including a 5% raise in June. You're not going to find another closed end fund that delivers this type of growth. Most will struggle to maintain their high payouts, much less raise them. But UTG has been able to do it also while growing its NAV per share over the past decade. We can see the portfolio's returns have exceeded that distribution rate and allowed that to be the case. This fund does use some leverage, but that's largely because it focuses on lower volatility stocks. Utilities make up about half of the portfolio here. And while that might sound like a sleepy low growth exposure, a lot of these companies are actually tied to the AI buildout. So you have companies like Talon Energy and uh Constellation that are providing nuclear power to the hyperscalers. You have GE Vernova with gas turbines. So uh the fund has been able to ride some of that tailwind the last couple of years which has been helpful because it went through a pretty rough stretch in 2022 when rates were being increased. That really weighed on utility stocks. Inflation was rising as well and that pulled down valuations. It was a really tough stretch for the fund that caused NAV per share to come down and that caused some investors to even question the safety of the dividend. We talked to the management team uh during the the thick of that headwind and it was really helpful to hear their perspective. Uh it aligned with our expectation that the payout would remain safe. They also emphasized that the most important thing we do every day is find ways to fund and protect the distribution. So there's a lot of confidence that shareholders have placed in this fund for that reason. It gets an 80 dividend safety score. That's the highest rating we have across closed end funds. Other things to like are its low expense ratio, relatively low, lower than 97% of equity CFS. Performance has been about in line with its peers, which is respectable for having a more defensive portfolio. And volatility has been lower as well. uh management focuses on finding businesses that operate in areas that have high barriers to entry, limited competition, uh regulatory scrutiny, consistent sustainable cash flow. They're profitable in both up and down economic cycles. These companies view dividends as important ways to return capital. So largely the type of investment philosophy that we share as dividend growth investors. The fund currently trades basically at NAV. That's pretty common given its history here. Uh, this fund since it does pay a stable and rising dividend over time, I like to look at valuation from that perspective. This blue band here is showing where the fund would trade if it was 10% above or below its 5-year average dividend yield of 7%. You can see when the tide goes out, like the financial crisis here or the pandemic in 2020, that's a great time to buy a fund like this. It's going to sell off pretty hard. Right now, it's kind of near the high end of that band. So, reasonably valued in my opinion. uh good time to have bought would have been during that scare with rates rising when we published that note back in early 2024. So UTG is about the highest quality you can find in closed and fund land for good reason. I think the fund remains well positioned for a number of different environments with a defensive tilt which can appeal to some conservative income investors. Next up is the John Hancock Tax Advantage Dividend Income Fund, ticker HTD, with a 7.5% yield. This fund is a little bit more defensive than the first two we just looked at. Utility stocks are about 40% of the portfolio, but preferred stocks and corporate bonds also make up about 40% plus of the portfolio. These areas generally pay fixed income and are more defensive than common stocks, especially when the tide goes out. The portfolio is also very well diversified here. The largest weight is about a 2% position size. Mostly regulated utilities. a number of names that are popular in dividend portfolios like Duke Energy, Kinder Morgan. So, essential businesses with hard to replicate infrastructure. NAV per share has just barely increased over the past decade, enough to qualify for this video. The lower risk nature of this fund has also resulted in somewhat lower returns, but they've still been enough to cover the portfolio's current distribution rate over that period of time. Now, HTD does use notable leverage. 30% of the portfolio is coming from largely debt that comes with variable borrowing costs. So, when interest rates increase, that increases HTD's interest expense and can also reduce the value of these fixed income holdings like corporate bonds and preferred stocks. You can see when interest rates did rise in 2022, that was a pretty big headwind to the portfolio's value, but the distribution remained safe during that time. It's actually been stable to rising every year coming out of the financial crisis when the payout was cut by about 30%. I assume that was driven by a lot of the financial stocks that issue those preferred shares running into some trouble there. It was also raised in 2025 for the first time in years. So HD has a pretty solid track record here getting through different types of interest environments and part of that reflects this NI coverage. If you're unfamiliar with that term and the closed on fund space, it's measuring the percentage of a fund's distribution that's covered by net investment income, which is the interest and dividends earned by the fund less expenses. So, in other words, think about this as the portion of the payout that's covered by things that are not capital gains, which are going to be more fickle and tied to what's happening in the stock market. And about 70% of the payout is covered by the interest in dividends from those fixed income holdings which provides an extra sense of security in my opinion. Looking at valuation now we can see that the stock is trading at a 3% discount to NAV. Uh it's actually a little tighter than its 5-year average of a 6% discount and a notable improvement from the bottom here in 2024 after again that rate hiking weakness pushed the discount to nearly 15%. So there can definitely be some opportunistic times to buy the stock since it does carry some leverage and it is sensitive to interest rates, but it's a pretty good all-weather fund. It's still outperformed most CFS over the past decade, but it has been a little bit more volatile again due to the use of leverage and the sensitivity to interest rates. So keep those things in mind. But HD does have a pretty good track record overall and again comes with some more defense with bond and preferred stock exposure if that's something you're interested in. The next fund is the Black Rockck Utilities Infrastructure and Power Opportunities Trust, ticker BUI, with a 7% yield. In some ways, BUI reminds me of a smaller UTG. Both portfolios invest around half of their money in utility stocks with another chunk going toward industrial and energy holdings. The theme is essential infrastructure businesses that generate predictable cash flow no matter what the economy is doing with hard to replicate assets. portfolio is pretty diversified across those holdings. There's not really a single big bet here. And we can see that NAV per share has grown over the past decade from about 20 bucks to over $25 today. The portfolio's returns have exceeded that 7% distribution rate. Unlike UTG, BUI is debtree. There's no use of leverage, which I do like. And dividends cover about 16% of the funds distribution. So, it is pretty reliant on capital gains to keep funding that payout. The dividend has been paid without interruption since the fund launched in 2011, and it's even been raised the last two years, including a pretty generous 13% bump in June this past summer. Uh, from a valuation perspective, this stock, this fund rather, had been trading at a 10% premium to NAV earlier this year. Management took advantage of that premium by announcing a rights offering. We published a note here that went out to BUI shareholders on our website and that erased the 10% premium pretty quickly. It actually swung this the fund down to a 3% discount to NAV with that issuance. Uh today that discount sits at uh basically flat. This fund is trading at NAV pretty much in line with its 5-year average. So nothing too crazy going on here. You're getting a pretty decent yield. um that comes with a fund that has outperformed most of its peers despite focusing on some lower volatility stocks in the regulated utility space. And the expense ratio is not quite as low as UTGS, but it's still lower than most of the equity CES you're going to find. And again, there's there's no extra drag from rising debt costs because the fund doesn't use any leverage. So, uh BUI looks interesting. I think there's probably too much overlap with UTG to really get excited about owning both, but it's a smaller version that has done a lot of things well since it launched in 2011. Last but not least is the Cohen and Steers Infrastructure Fund, ticker UTF, with a 7.4% yield. UTF focuses on essential infrastructure. So things like utilities, energy pipelines, toll roads, airports, railroads, telecom networks, utility stocks are the biggest bet here, about 40% of the portfolio. But there's also a good mix in industrial and energy stocks. If you look at the funds fact sheet, it breaks out those exposures here. You can see they're pretty diverse across different types of infrastructure. And also geographically, the US is only about 55% of the portfolio. So UTF is really a global bet on these infrastructure plays. The portfolio doesn't rely on any single holding. Uh no position exceeds 5% of the portfolio's value. It includes a lot of blue chip stocks that are probably in some of your portfolios like Duke Energy, Union Pacific, and that strategy has served the company well. It's generated a healthy long-term return that's moderately exceeded that distribution rate. That's helped NAV per share slightly increase over the past decade while maintaining solid distributions. The payout was cut here during the financial crisis, but has since been recovering nicely. Management raised the distribution by 6.5% in March. That was the first bump since 2018. So, a good track record here of being conservative with the distribution, making sure it's being earned. This fund does use leverage 30%. That's among the highest of the funds we looked at today. So, do keep that in mind during down markets. That can kind of exasperate the downside. It also makes the fund more sensitive to interest rates. But 25% of those distributions are being covered from interest and dividends rather than capital appreciation, which increases the safety profile a little bit. From a valuation perspective here, this fund is one that does track with its 5-year average dividend yield pretty well. Uh buying during the depths of the pandemic would have been nice. Also, when interest rates increased, the fund traded down uh following 2022 there. So, that would have been a good time to buy as well. Today, it's right in the middle of that expected price band. So reasonably valued. Uh the fund trades at a 1% discount to NAV. There's a pretty big drop in 2025 back when the fund was trading at a premium. Management also took advantage of that by announcing a rights offering. We emailed a note out about that. Uh basically the company sees great demand for power and digital infrastructure and had a chance to expand its asset base significantly to take advantage of that while also of course generating more fees for management. That being said, the fund has a solid track record overall. Uh, it's outperformed most of its equity CF peers while delivering slightly less volatility. The expense ratio is the highest of the five funds we looked at at 1.36%. I do wish that was lower with UTF, but I can appreciate its solid track record of being a reliable income payer and I think its focus uh globally on infrastructure is a pretty good theme. You just have to be opportunistic, I think, when you look to buy a fund like this. I put these five closed on funds into a portfolio here on Simply Safe Dividends because I wanted to show you some really helpful metrics that are available to help you evaluate these different holdings. So, if you open up the column selector here and go down, you'll find a number of metrics that are available for CFS, you can move their position in your portfolio by clicking and dragging to get the view you want. But it makes it really simple to compare different funds you own based on their total returns, expense ratios, if they're trading at a premium or discount to NAV. You can keep an eye on all of these things to make better informed and more timely investment decisions. We also have a closed end fund screener again making it very easy to find the exact type of CF you want, whether it's trading at a premium or a discount to NAV. It's dividend safety score from us. It's all at your fingertips there to make this somewhat complex space easier to navigate and hopefully help you reduce risk and generate more income. So, I hope you enjoyed learning about these five funds. I really appreciate you watching to the end here. If you'd like to try Simply Safe Dividends, I'll leave a link below to our one month free trial. Uh only available through that link. Thank you for watching and I hope to catch you next time.