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FYI: Being an income investor in today’s low-yield environment is a challenge, to say the least. U.S. Treasury bonds are paying near-zero, high-credit-quality corporates and municipals are paying well below 3%, and last week saw record outflows on junk bond funds. Regards, Ted http://investorplace.com/2014/08/dividend-mutual-funds-yield/print
Ted...I'm a big believer in divi's as an income strategy, but cannot figure out why folks defer to a fund as opposed to a tidy collection of individual holdings.
@PressmUP: I couldn't agree more ! I have said on many occasions, mutual funds are the last place to look for decent yields. For that, one must look at high dividend paying common and preferred stocks and individual bonds. Regards, Ted
Difficult to find individual bonds that the Average Joe can buy retail, directly---without a middleman. I had a zero-coupon 10-year thing that did me very well. But the rates from that source are down a bit, now, too. And I don't any longer feel like tying up money for 10 years. It was a good move for me, back in 2003.
We have no problem using funds to build income portfolios. Aside from the many bond funds that are well-run and offer acceptable yields (and that are not loaded with long-term junk), there are a number of low-octane, diversified stock funds and what we would call alternative or dynamic allocation funds that fit the bill.
Preferred stocks are a b.... to buy individually, as witnessed by my post to a thread on that topic earlier. While we recognize the overall premium prices for most preferred stocks, KIFYX has done an ok job, and they have actually reduced the dividend to account for lower yields rather than load up the portfolio with holdings that are too risky. It bears watching, however. PAUIX provides a very generous dividend while maintaining a very reasonable risk profile.
Stock funds that seem appropriate include Schwab's SCHF, with a 2.54% yield. Hennessey GASFX comes in at 2.41%. SPDR's SDY is 2.27%. Wasatch WASIX is 2.8%. If MLPs are part of your income strategy, Oppenheimer Steel Path is attractive. Matthews MAPIX has always had a decent dividend, last 12 months has been 2.84%. Federated Intl IVFIX is at 4.71%.
An investor can be as conservative or aggressive as they want and still find decent yield. And it is possible to construct a diversified mix of funds that provide an attractive yield. Of course, one can go the individual stock route. For most folks, however, using ETFs or MFs can be a lot easier. No method is foolproof. One should consider, however, where the underlying positions' gains have been and perhaps weight the mix of portfolio holdings accordingly. Some folks just want to do better than a money market or short-term CD, and there are a lot of options available, but buyer beware in terms of risk they might be buying.
Comments
Regards,
Ted
Preferred stocks are a b.... to buy individually, as witnessed by my post to a thread on that topic earlier. While we recognize the overall premium prices for most preferred stocks, KIFYX has done an ok job, and they have actually reduced the dividend to account for lower yields rather than load up the portfolio with holdings that are too risky. It bears watching, however. PAUIX provides a very generous dividend while maintaining a very reasonable risk profile.
Stock funds that seem appropriate include Schwab's SCHF, with a 2.54% yield. Hennessey GASFX comes in at 2.41%. SPDR's SDY is 2.27%. Wasatch WASIX is 2.8%. If MLPs are part of your income strategy, Oppenheimer Steel Path is attractive. Matthews MAPIX has always had a decent dividend, last 12 months has been 2.84%. Federated Intl IVFIX is at 4.71%.
An investor can be as conservative or aggressive as they want and still find decent yield. And it is possible to construct a diversified mix of funds that provide an attractive yield. Of course, one can go the individual stock route. For most folks, however, using ETFs or MFs can be a lot easier. No method is foolproof. One should consider, however, where the underlying positions' gains have been and perhaps weight the mix of portfolio holdings accordingly. Some folks just want to do better than a money market or short-term CD, and there are a lot of options available, but buyer beware in terms of risk they might be buying.