Five funds and trusts that pay dividends monthly

If you are in search of a monthly payment from your investments to help cover regular bills or subscriptions, funds and trusts offering a monthly dividend could be an attractive option.

While there’s a large variety of funds that offer some type of dividend, those with a monthly payment narrow down to a more select group. And although it may be appealing to find that deposit in your account each month, you will also want to keep an eye on how the investment has performed otherwise, and if it is truly the right choice for you.

Here are five funds and trusts that offer a monthly dividend to investors. Remember, previous performance does not guarantee future gains, and companies can change their dividends at any time.

TwentyFour Select Monthly Income

TwentyFour Select is the sole investment trust listed by the Association of Investment Companies that pays out dividends on a monthly basis, and last year paid out a total of 8.46% to its investors. The trust invests in fixed income securities, such as corporate bonds, high yield bonds, and bank loans, and in the past five years has averaged an annual total return of 8.41%. With most of this paid out to shareholders in dividends, the price of the company has increased by just 0.23% in the past five years, though there have been ups and downs along the way. The ongoing charge for the trust is higher than may be found with other funds, at 1.24%.

Vanguard USD Emerging Market Government Bond ETF

The Vanguard Emerging Market Government Bond ETF is another fund which pays a monthly income, and is featured on AJ Bell’s favourite fund list. However, the investment isn’t for everyone. Despite paying out a dividend yield of 6.1% last year, the fund has lost an average 0.13% in total return each year over the last five years. In other words, while it has produced a healthy income stream, the share price has dropped over 23% in the past five years.

The fund invests in bonds issued by emerging market governments, from Mexico, Qatar, and Argentina, among others. Government bonds are often seen as safe havens but that’s not entirely the case in emerging markets, where the chance of default is greater, and volatility tends to be higher. It’s definitely a more specialist sector, and sometimes more adventurous investors choose it to add some diversification, or because they are attracted by the yields, and willing to take on the risks. Investors in the fund pay an ongoing charge of 0.25%.

Man Income Professional Inc

Man Income Professional invests in UK equities and last year paid investors 4.98% in dividends over the year. It holds well known British companies such as Rio Tinto, Barclays, Shell and HSBC.

The fund has a higher charge than some others on the list at 0.9%, but it has returned an average 13.6% annually over the last five years, beating the sector average 9.9% total return. It is featured on the AJ Bell favourite funds list and has had the same manager, Henery Dixon, since 2013. It’s suitable for investors that have a higher risk appetite due its high volume of equity holdings.

VT AJ Bell Income

For investors in search of a pre-packaged investment plan that includes dividend payments, the AJ Bell Income fund can offer a diversified set of investments while still paying out an income. The fund paid out investors a yield of 3.03% last year, split across 12 months. In the past five years, it has beaten the sector average with a 4.79% total return.

The fund holds just under 50% of its portfolio in stocks, and most of the rest in bonds. It invests across a variety of tracker funds, which allows it to split its regional exposure over different countries. To invest, there is an ongoing charge of 0.5%.

BlackRock ICS Sterling Liq Premier Inc

This BlackRock fund is made up of a majority in cash holdings with some allocation to bonds, and is featured on AJ Bell’s favourite fund’s list. It is a low-risk investment vehicle that has a charge of 0.1%. Last year, the fund paid out a yield of 4.58%.

Over the past five years, the fund has averaged a total return of 2.66%, outpacing the sector average of 2.32%. The strategy is geared towards customers who are aiming to keep their money secure, but still create some income through their investment. The fund is managed by Matt Clay, who have been with the company since 2009 respectively.