Closed end fund -- shares trade like a stock, the market price can trade at a discount, premium or equal to the net asset value (NAV) of the fund. One advantage is that the fund manager doesn't have to keep cash around and/or have to sell stocks to raise cash to pay people who sell the fund when there is a lot of redemptions as with open ended funds (ie. mutual funds). The share price usually goes down when there's a lot of selling. This can be an advantage to the buyer if the fund was oversold. The fund manager can buy and sell stocks or other securities and take advantage of economic cycles by going in and out of various sectors (as long as fund is designed to include more than one sector)

Open ended fund, ie. mutual fund -- share price always trades at the NAV

ETF (exchange traded fund) - similar to a closed end fund except the portfolio usually isn't changed. ETFs usually are designed to track some index and have very low management fees.

Some of my favorite dividend paying funds:

Real estate has defensive characteristics, ie. renters have to pay their rent even during a recession. Real estate generally benefits from low or moderate inflation. By law REITs have to pay out 90% of their taxable income to shareholders in the form of dividends.

AGD - closed end fund similar to ADVDX

PHK and FHI - high income funds that invest in corporate bonds, mortgage securities, etc.

Note: Most dividends are qualified for the dividend tax cut (15% rate). REITs generally are not, but some or all of the dividends can be long term capital gains (15% tax rate) and/or return of capital (tax free until you sell your REIT fund or stocks). This law expires in 2010 and may be extended again. Check your brokerage 1099 and year end statement to see if your dividends are qualified, non-qualified or return on capital.

Canadian oil and gas trusts can grow or at least replenish oil and gas producing properties by acquiring new oil and gas producing properties unlike US oil and gas trusts which terminate when the oil and gas are gone. They usually pay good dividends, but energy prices are volatile. Canadian and US citizens invest in Canadian trusts for income (as well as other investments). Energy investments such as Canadian oil and gas trusts, PSEC, PEO, and other energy producing investments may be used as a hedge against energy prices. Pipelines, tankers, drillers and other oil and gas services might not benefit from higher oil and gas prices.

More income investing/dividend ideas