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This Monthly Income ETF Just Became an Even Better Buy

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·1 min read
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  • ZDY.TO
  • ZCB.TO
  • ZMI.TO
  • BMO

Recurring income is one of the best reasons to invest in dividend stocks. And if you're looking for a solid investment that can bring you cash flow every month, then look no further than the BMO Monthly Income ETF (TSX:ZMI), which holds interests in several exchange-traded funds (ETFs). The fund has an annualized distribution yield of 3.8%, giving investors a much better payout than the average S&P 500 yield of around 1.3%.

It includes investments in other ETFs run by the Bank of Montreal (TSX:BMO)(NYSE:BMO), such as the BMO Corporate Bond Index ETF (TSX:ZCB), which accounts for more than 23% of the fund's weight. The BMO US Dividend ETF (TSX:ZDY) also makes up more than 19% of the total holdings. In total, almost 40% of the ETF is in fixed income while more than 60% is in stock.

The Monthly Income ETF became a more attractive buy for dividend investors in August after BMO Asset Management announced that the management fees for the fund would be coming down. As of Sept. 1, the annual management fee of 0.55% for the Monthly Income ETF would fall to just 0.18%. With a reduction in fees, that means better returns for investors.

Overall, the fund is a great option for investors who want recurring income without much of the risk. BMO ranks the fund with a low to medium risk rating. Over the past year, the ETF has risen by 9% in value and its total returns come in at around 14%. It's a sound investment that long-term investors can just buy and forget about.

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