4 Stock Funds Paying Monthly Dividends with Yields Above 5%

Who doesn’t love receiving monthly payouts from investments? It feels like enjoying a steady stream of income similar to employment—except you’re no longer actively working for it.

However, most stocks and bonds don’t pay monthly dividends, and the majority of ETFs don’t either. This is where unit trusts come in handy, as many offer consistent payouts. In this post, I’ll highlight 4 stock unit trusts that pay monthly dividends with annual yields above 5%. Do note that these yields are not guaranteed and may fluctuate based on the performance of the underlying investments.

Selection Process

To narrow down the options, I screened the FSMOne platform (no, this is not a sponsored post) to identify stock funds that meet the following criteria:

• Denominated in Singapore Dollars (SGD) or at least hedged to SGD.
• Positive total returns over the past 3- and 5-year periods, ensuring their strategies have shown resilience and recovery, particularly during the 2022 bear market.
• Avoidance of funds with negative total returns to filter out unit trusts that might offer high payouts but suffer significant capital losses.

After screening, I found 4 stock funds that meet these criteria. Below, I’ve ranked them by yield, starting from the highest.

#1 NIKKO AM JAPAN DIVIDEND EQUITY SGD-H – 7.1% Yield

Leading the list is a Japanese fund offering a 7.1% yield. The fund manager focuses on Japanese stocks that pay dividends but also aims for capital appreciation over time. Its top holdings include financial giants such as Tokio Marine, Mitsubishi UFJ Financial, and Sumitomo Mitsui Financial. This isn’t surprising, as financial stocks are known for their strong dividend distributions.

However, the fund is well-diversified despite its financial focus. It holds 52 stocks across several industries, with the Industrials sector having the largest exposure, followed by Financials. Notably, it also includes Buffett’s favorite trading houses, such as Itochu, among its top holdings.

The fund has a consistent distribution history, with payouts typically made around the middle of each month. The amounts have remained stable, averaging approximately S$0.01 per unit.

In terms of total returns, this fund has delivered double-digit annual returns, the highest among the funds on this list. This performance is largely due to the bullish Japanese stock market in recent years. While past performance isn’t indicative of future results, strong historical returns can signal good fund management and strategy execution.

#2 EASTSPRING INVESTMENTS – ASIAN LOW VOLATILITY EQUITY FUND ASDM SGD – 7.05% Yield

This fund offers a 7.05% dividend yield and takes a different approach compared to the Japan-focused fund. It deliberately excludes Japanese equities, instead investing across the rest of the Asia-Pacific region. The fund’s top geographic exposures are:

• China (24.8%)
• India (22.4%)
• Taiwan (13.7%)
• Australia (10.5%)

With 129 holdings as of the November 2024 update, the fund appears to employ an equal-weighting strategy, as its top 10 holdings account for 2–2.5% each. This ensures no outsized allocation to a single stock. The largest sector exposures include:

• Financials (28.8%)
• Information Technology (15.5%)
• Consumer Staples (13.8%)
• Industrials (10%)

Dividends are distributed monthly, typically between the 8th and 11th of each month.

In terms of performance, the fund has achieved positive total returns:

• 6.3% per year over the past 3 years
• 4.82% per year over the past 5 years

While its returns may not match the Japan fund, its ability to maintain consistent, positive performance across volatile markets is commendable. Notably, the fund delivered over 15% annual returns in the past 2 years, an impressive achievement for Asian equities.

#3 NIKKO AM SINGAPORE DIVIDEND EQUITY SGD – 5.97% Yield

The third fund is a Singapore-centric option, holding 41 counters, which is more than the 30-member Straits Times Index (STI) or the 17-member MSCI Singapore Index. This makes it more diversified, although its top holdings remain familiar blue-chip names that most investors would recognize.

You might wonder: why not just buy the STI ETF? Here are two key reasons:

1. The STI ETF distributes dividends semi-annually, while the Nikko AM Singapore Dividend Equity Fund pays dividends monthly, typically in the middle of each month.
2. The fund’s 5.97% yield is higher than the STI ETF’s 4.17% yield.

However, in terms of total returns, the STI ETF has outperformed over the past decade, delivering an average annual return of 4.95%, compared to the Nikko AM Singapore Dividend Equity Fund’s 4.27% per year. If consistent monthly dividends aren’t a priority, the STI ETF would have been the better choice for long-term performance likely due to lower expense ratio.

#4 UNITED GLOBAL DURABLE EQUITIES FUND DIS SGD – 5.29% Yield

This fund stands out with its global exposure, unlike the other three on this list. Its largest allocation is to the United States (45.18%), which is unsurprising given that the U.S. economy is the largest globally, and its stocks dominate in size. Even the MSCI World Index allocates over 70% to the U.S. The fund’s second-largest exposure is to Canada (15.8%), with the remainder diversified across major developed markets and an emerging market, India.

Some may compare this fund to a global stock index fund. While its total returns may not outperform, its primary goal is to provide consistent monthly dividend payouts, which it achieves effectively. The fund manager adds value by tilting stock selection toward dividend-paying equities, naturally reducing exposure to technology stocks, as they tend to pay little or no dividends. Consequently, its top holdings differ significantly from those in a typical global index, featuring names like Intact Financial, Constellation Software, and US Foods.

Dividends are distributed after the 10th of each month.

In terms of performance, the fund has delivered more than 5% annual returns over the past 3- and 5-year periods, with double-digit annual returns in the last 2 years.

Conclusion

Each of these funds has its own geographic focus, offering unique exposure to different regions. For investors seeking diversification, it might even make sense to combine all four funds to build a well-rounded portfolio while enjoying a steady monthly income stream from these investments.

For those looking to replace employment income or maintain consistent cash flow, this list could be a valuable starting point. If you find this helpful, feel free to share your thoughts—I’d be happy to explore more options in the future, including bond funds for those seeking to further reduce risk while maintaining regular payouts.

📈 Dividend stock funds can provide steady income, but how do they fit into your overall investment strategy? I help investors create tailored portfolios to support their life goals. Drop your contact details [here], and I’ll personally reach out to discuss how we can optimize your investments.”