Beat Market Volatility With 2 Monthly Dividends Yielding +11%
Market Volatility Is Like Traffic on the Streets
Market volatility is an inherent part of investing, and 2026 has been no exception. We began the year with headlines dominated by concerns surrounding private credit, with investors questioning the quality of underlying loans and the potential for broader financial contagion. Before long, the news cycle shifted toward geopolitical tensions surrounding the Strait of Hormuz, with implications for global energy supplies, inflation, and economic growth.
Along with the above issues, concerns surrounding the sustainability of massive AI capex have periodically rattled the technology sector and the broader markets. With the U.S. midterm elections approaching, markets have yet another element of focus.
The truth is that there is never a shortage of headlines capable of spooking the financial markets. One concern fades, another inevitably takes its place. If market volatility makes you uncomfortable, perhaps the stock market isn't your cup of tea.
At High Dividend Opportunities, we view volatility as an opportunity rather than a cause for fear. After all, the timeless investing principle of "buy fear, sell greed" is much easier to appreciate in theory than to practice when stock prices are falling and pessimism dominates the headlines.
CNN
You don't stop driving because roads have traffic. You plan for it, adapt to the conditions, and keep moving toward your destination. Investing is no different.
Rate-Sensitive Sectors Are Feeling the Heat
Amid uncertainty surrounding the future direction of inflation and interest rates, fixed-income securities (preferred stocks and bonds) and infrastructure stocks have experienced significant selling pressure in recent months.
Yet, declining market prices do not always imply deteriorating business fundamentals or weakening cash flows. In many cases, they allow long-term investors to acquire productive assets at more attractive valuations and lock in higher yields.
Our Income Method focuses on investing towards generating recurring cash flows, regardless of the market's daily direction. Steady income from our portfolio allows us to remain focused on collecting dividends, reinvesting a portion of that income to steadily accumulate more shares while they are cheaper, and quietly navigate the market noise. We particularly enjoy monthly income, as they are more frequent, allowing us to maximize the power of compounding.
Today, we will discuss two monthly-paying investments that provide exposure to very different corners of the market.
For investors preferring a relatively defensive asset class with better immunity to earnings and general market sentiment, we have the 11% yielding Virtus InfraCap U.S. Preferred Stock ETF (PFFA).
For investors seeking exposure to the exciting growth opportunities surrounding AI, cybersecurity, electrification, data centers, and the modernization of critical infrastructure, we have 14.6% yielding NXG NextGen Infrastructure Income Fund (NXG)
These funds present very different investment approaches, but share their objective of delivering monthly income to their shareholders.
Monthly Income From Preferred Stocks – PFFA (Yield 11%)
Virtus InfraCap U.S. Preferred Stock ETF (PFFA) is an actively managed ETF that utilizes modest leverage to invest in a diversified portfolio of preferred securities. PFFA has historically outperformed its benchmark, the iShares Preferred & Income Securities ETF
(PFF), although the recent rise in Treasury yields has weighed on its performance.
Looking at PFFA’s top holdings we see several attractive placements, including Flagstar Bank's fixed-to-floating preferred (FLG-A), Energy Transfer's 9.25% preferred (ET-I), and preferred securities issued by Telephone and Data Systems (TDS) and Banc of California (BANC). These securities offer attractive income opportunities backed by issuers with strong fundamentals.
We will note that PFFA has demonstrated its ability to grow distributions through the previous interest rate tightening cycle. Price headwind from higher rates creates valuation discrepancies, and uneven discounts among asset classes, allowing active managers to take advantage.
Consider a rental property whose market value declines due to higher interest rates, even as its rental income continues to grow. Would you sell the property in panic or seize the opportunity to acquire more income-producing assets at discounted prices?
PFFA presents a similar opportunity. Its active management provides flexibility to capitalize on market dislocations while pursuing sustainable income growth. Notably, approximately 50% of its distributions over the past five years have been qualified dividend income (QDI).
PFFA currently pays $0.1725/share monthly, representing an 11% annualized yield.
Monthly Income From Next Generation Infrastructure – NXG (Yield 14.6%)
Established in 2012 as a midstream-focused fund, NextGen Infrastructure Income Fund (NXG) transformed its investment strategy in 2020 to focus on infrastructure supporting emerging technologies. Since this transition, the CEF has raised its distributions three times.
NXG manages approximately $510 million in invested assets across 56 common equity holdings, with its top ten positions representing approximately 37% of the portfolio. Its largest sector allocations include engineering and construction (19%), utilities (19%), cybersecurity (10%), and midstream energy (18%). The fund also invests in emerging infrastructure opportunities across cloud computing, fuel cells, satellites, solar energy, and semiconductor manufacturing.
Notably, approximately 94% of NXG's holdings are U.S.-based companies, positioning the portfolio to benefit from substantial domestic investments in AI infrastructure and data center development.
NXG pays $0.60/share monthly, representing a 14.6% annualized yield. The distribution was increased by 11% in June, reflecting management's commitment to growing shareholder income. We will note that nearly all of NXG's distributions in recent years have been classified as Return of Capital (ROC), the fund has demonstrated strong NAV preservation and growth since its strategic transformation. This highlights why investors should evaluate the underlying economics rather than assume ROC automatically indicates destructive distributions. Last week, we discussed this concept in detail.
NXG employs approximately 30% leverage through variable-rate borrowing at SOFR + 0.80%, creating some sensitivity to interest rates. However, the sectors it focuses on benefit from long-term growth drivers, and management has the flexibility to adjust leverage as market conditions and investment opportunities evolve.
Trading at a 5% discount to NAV, NXG offers an attractive combination of high monthly income and exposure to the infrastructure powering tomorrow's economy.
The Bottom Line
Traffic is an unavoidable part of driving, just as volatility is an unavoidable part of investing. What matters is having a strategy that keeps you moving toward your destination, regardless of the conditions along the way.
At High Dividend Opportunities, the Income Method is our strategy to keep cash flowing into our portfolios, regardless of which direction the markets are moving. Our holdings span different sectors and asset classes, providing diversified sources of recurring income that allow us to steadily work toward our financial goals, one dividend at a time. This is the power of income investing.
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