Many investors look to their portfolios for income. To get current income, these investors should look for high yield investments. High-yielding investments can be a little confusing if you just search for the biggest yields. This article will share some guidelines to creating a cash machine for high income.
A “Real” High Yield Investment:
- Pays dividends yields of 5% to 20% annual
- Highly liquid vehicles that can be bought or sold through discount or online brokers
- Less volatility than the average large cap stock portfolio
- Drives dividends from cash-flow, not debt payments
- Pays dividends monthly and/or quarterly
There are so many investment categories that offer high yield securities. Here is a list of high yield investments:
- Business Development Companies (BDCs)
- Canadian Royalty Trusts
- Closed End Funds
- Convertible Securities
- Corporate Bonds
- Emerging Market Debt
- Exchange Traded Funds (ETFs)
- Exchange Traded Notes (ETNs)
- Grantor Trusts
- Master Limited Partnerships (MLPs)
- Oil/Shipping Tanker Stocks
- Option Income Funds
- Preferred Stocks
- Real Estate Investment Trusts (REITs)
- Structured Products (i.e. STRIDES)
While do you want to buy high yielding investments? The five keys to the cash machine high income investment strategy are as follows:
- It pays a double-digit yield
- It’s highly diversified
- It’s highly liquid
- It’s flexible
- It offers upside appreciation with less volatility than common stocks
To build your own cash machine portfolio you must do the following:
- Desire to build income portfolio
- Look for securities paying yields of 5% to 20%
- Invest in asset classes with strong fundamentals in pockets of economic strength
- Rotate in and out of sectors of strength
- Target capital appreciation of 10% to 15% per year
The bottom line is that all income investors should have at least a portion of their income in a cash machine with high yield investments.
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