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Monthly Payouts from High-Yield Muni ETF

01/02/2020 5:00 am EST

Focus: ETFS

Jim Woods

Editor, Successful Investing and Intelligence Report

There are many securities on the market that can pay dividends every month, though not as many are exchange-traded funds (ETFs), explains Jim Woods, editor of The Deep Woods.

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 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.

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