Life presents countless opportunities for exploration. You can meet someone whose experiences and habits are entirely different from yours, yet certain universal essentials connect us all—the requirement of food, water, and sleep and the need for relationships. These shared basics remind us that, despite cultural differences, the fundamental building blocks of human life remain consistent.
The same is true for economies. While societies may develop unique traits, foundational elements like real estate and healthcare are universal. These are the necessities people rely on without hesitation, making them timeless and stable investments.
When investing for income, I focus on sources tied to these essentials, as they tend to remain consistent across cultures and economic cycles. Rent-collecting landlords of commercial businesses are unimpacted by trade wars, and people rely on prescription drugs and treatments even in harsh economic conditions. Real estate and healthcare are prime examples of steady sectors in any economy. No matter where you are in the world, people need to shop for groceries, dine at restaurants, and take medication for their illnesses and ailments.
Today, I’ll highlight two funds that offer exposure to these essential economic components and deliver reliable income through consistent distributions.
Pick 1: RQI – Yield 6.9%
Cohen & Steers Quality Income Realty Fund (RQI) is a CEF (Closed-End Fund) that provides access to a diversified pool of 204 REITs, with its top ten holdings comprising ~50% of the invested assets. Notably, RQI’s top holdings also happen to be among the largest and best-managed REITs in business. Source
RQI Fact Card
RQI operates with a 27% leverage, at a weighted average cost of all financing at 2.4%. As such, the fund’s interest expense has limited benefit from rate cuts, but the leverage itself is likely to provide RQI a boost from improving sector valuations.
RQI has made growing distributions to shareholders since its inception in 2002. The CEF’s $0.08/share monthly distribution calculates to a 6.9% annualized yield. With its current market price at a 4% discount to NAV, RQI lets you buy into the best REITs at a bargain valuation.
Pick 2: THW – Yield 11.6%
An aging global population naturally increases the demand and utilization of healthcare services, including prescription drugs, treatments, and healthcare facilities. While the U.S. market is known for groundbreaking medical research and FDA approvals, countries like Switzerland, the United Kingdom, Germany, and Japan have also established strong reputations for pharmaceutical and biotech innovation. Companies like Roche, Sanofi, and AstraZeneca are not only leaders within their borders but are prominent on the global stage.
Abrdn World Healthcare Fund (THW) has traded at healthy premiums to NAV over the past five years. Over the past year, the fund has achieved a growing NAV. Thanks to the recent pullback, the CEF now trades at a modest 1.5% premium, presenting an attractive opportunity to buy/add.
THW maintains a strategy to invest at least 40% of its AUM in non-U.S. companies or those with substantial revenues from non-U.S. countries. The CEF holds 135 securities and operates with a 20% leverage to amplify the returns from its active management pursuits.
While THW gets an international vibe, it must be noted that ~46% of the CEF’s AUM is invested in U.S. corporations, and another 21% is invested in U.S. firms that have >40% non-U.S. revenue sources. Since its inception in June 2015, THW has maintained a steady monthly distribution. The CEF’s $0.1167/share monthly distribution calculates to an 11.6% annualized yield.
Conclusion
With RQI and THW, we can enjoy strong exposure to real estate and healthcare via two well-run funds. We're able to be richly rewarded by being a shareholder of these funds because of the strong distribution that these funds payout and the expert management that oversees them. Today, both of these opportunities presented trade at attractive valuations, meaning that if you buy them now, your money is going farther, all while they're paying you a strong monthly yield.
In retirement, making your money go further is a goal every retiree should embrace—not out of necessity, but because of the value each dollar holds, especially on a fixed income. By investing in these two exceptional funds that provide robust distributions, you can enjoy a steady stream of income. At High Dividend Opportunities, we follow the Income Method—a strategy designed to deliver reliable and consistent income from a deeply diversified portfolio. That’s the power of the Income Method. That’s the beauty of income investing.
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