If you're looking for a regular income stream that is paid out monthly, you're in luck, as there are several exchange-traded funds (ETFs) and listed investment vehicles set up specifically to pay out each month.
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An income strategy can suit some investors
These funds generally target income over capital returns, and two of the three we're looking at today pay fully or partially franked dividends, making them particularly suited to retirees, who can benefit from franking credits.
Today, we'll have a look at these funds and how much of each you'd need to buy to generate $1000 per month in income.
First, let's look at the Betashares Australian Dividend Harvester Active ETF (ASX: HVST).
According to the Betashares website, HVST "aims to provide franked income that exceeds the net income yield of the broad Australian share market on an annual basis, along with exposure to a diversified portfolio of Australian shares''.
The website adds:
The Fund's share portfolio is generally selected from the largest 100 Australian shares on the ASX, screened for high dividend and franking outcomes based upon expected future gross dividend payments. The share portfolio is rebalanced approximately every three months, with the aim of including the shares that are expected, within the next rebalance period, to provide the highest gross yield outcomes.
HVST has a 12-month distribution yield of 5.8%, 62.8% franked, bringing the gross distribution yield to 7.3%.
In order to target $1000 per month, you would need to own 17,241 units of HVST using the 5.8% yield as the measure, which would cost $227,753 at the current unit price of $13.21.
Another solid performer in the field is the WAM Income Maximiser Ltd (ASX: WMX).
WAM recently increased its dividend payouts, from 0.66 cents per share this October to 0.68 cents per share in December, or 0.97 cents per share including the value of franking credits.
The fund manager's chair, Geoff Wilson, said the first full year of operation delivered a strong outcome for shareholders.
The fund's portfolio value also increased strongly, rising 17.8% from inception to the end of June 30.
To generate $1000 per month from WMX, you would need to own 151,515 shares, worth $262,121.
This fund is a standout performer
And finally, there is the KKR Credit Income Fund (ASX: KKC), which is currently paying a very healthy 9.82% income stream, albeit with no franking attached.
The fund targets a return of 6% to 8% through the business cycle and is currently outperforming that. It is targeting a 20-cent-per-share return in FY27.
To generate $1000 per month from KKC, you'd need to buy 60,000 shares, worth $127,200.
