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Stockpickr: Stock Plays for Baby Boomers

With a generation of baby boomers set to retire en masse over the next decade, there are at least two compelling reasons to look at stocks that pay monthly dividends:

  1. If you happen to be among those preparing to retire, it's nice to have that monthly income.
  2. With so many people piling into these stocks, they will be solid investments with plenty of capital appreciation as well as dividend payments over the next five to 10 years.

Not surprising, the most popular blog post on was Stockerblog's list of 200 Stocks That Pay Dividends Monthly. And related to that blog post is the portfolio of the Top 100 Highest-Yielding Stocks That Pay Monthly Dividends, which offers an easy glance at which funds are invested in which stocks.

Some of the best mutual funds and hedge funds seem to be jumping on the monthly-paying-stocks bandwagon.

Take, for example, one of the highest-yielding monthly dividend payers, Pengrowth Energy Trust (PGH - Get Report), a Canadian oil royalty trust that yields about 15%. Among those invested in the stock is the Dreman Value Fund, which is run by Contrarian Investment Strategies author David Dreman. Dreman's Large Cap Value fund has delivered a phenomenal average annual return of 17% since its inception in 1991.

Dreman recently has been increasing his positions in some mega-cap stocks, such as Bank of America (BAC - Get Report) and Chevron (CVX - Get Report). Chevron pays its 3% dividend quarterly, not monthly; however, it trades at just 4.2 times cash flows. Bank of America, considered perhaps the most stable bank in the world -- particularly when compared with troubled peer Citigroup (C) -- has a 4.4% dividend and trades at a forward P/E of only 9.

For the rest of Dreman's holdings, check out the David Dreman page on Stockpickr.

Another fund loading up on Pengrowth Energy Trust is the Royce Opportunity Fund, which has returned an average of 14.8% annually over the past five years, a full 8.5% above the average return of its benchmark.
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BIF $7.78 0.78%
BAC $15.75 0.00%
CVX $89.91 2.03%
PGH $1.20 6.19%
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