How to Retire on Dividends: Earn a Safe 8%, Leave Your Principal Intact

by Brett Owens

A dividend aristocrat is a company that has continuously increased the size of dividends it pays to its shareholders. To be considered a dividend aristocrat, a company must typically raise dividends consistently for at least 25 years. www.investopedia.com

CEF investors don’t have this popularity problem; we can get a deal. We simply wait and only purchase CEFs when they trade at a discount to their net asset values (or the sum of the market prices of the preferred shares they own minus any leverage). The preferred ETFs, Invesco Preferred and iShares US Preferred, yield 5.8% and 6.1%, respectively, and trade roughly at their “par” value, which means we’re paying $1 for $1 in preferred shares. Meanwhile, Nuveen Preferred & Income Securities Fund (JPS), a CEF, yields more (7.5%) and trades for just 96 cents on the dollar! Plus, it has the benefit of an active manager, which is why the fund regularly outperforms its ETF counterparts.

Better Yields, Deals, and Returns with CEFs

Nuveen Preferred & Income, returned an amazing 317%.