Is Income Investing Possible With ETFs?
As I’ve written before, exchange-traded funds (ETFs) are the most flexible instruments in today’s financial markets.
With more than 2,000 ETFs trading on U.S. stock exchanges, you can assemble a portfolio of ETFs that invests in almost anything, anywhere.
Various ETFs allow you to place a triple-leveraged bet on U.S. tech stocks, invest in Chinese stocks or even speculate on the price of palladium.
In short, ETFs allow you to invest in almost any asset class under the sun.
But after surveying many of our subscribers, my team and I realized that we had overlooked a critical ETF investment strategy.
As it turns out, many of you are focused on generating a steady source of income in your investment portfolio. And that’s why we have developed the new Oxford Wealth Accelerator Income Portfolio.
Traditional Income Investing vs. ETFs
Let me first address the “elephant in the room.” Some of my colleagues at The Oxford Club don’t believe in using ETFs for income investing.
Chief Income Strategist Marc Lichtenfeld primarily recommends individual stocks based on a company’s ability to fund or raise its dividend in the future. He prefers to focus on the “best of the best.”
My colleague at Liberty Through Wealth Mark Skousen is also an ETF skeptic. I’ve known Mark for close to 15 years. And every time I’ve heard someone ask him about “income investing,” his answer has been impressively consistent: “Buy Main Street Capital Corp. (NYSE: MAIN).”
At the same time, both of these approaches also highlight how my view of income investing differs from theirs.
First, Marc and Mark are willing to bet big on a single company. I’m far more risk-averse. I prefer to bet on a portfolio of companies. Luckily, there is a whole slew of low-cost dividend-paying ETFs that allow you to do just that.
Second – and more importantly – my definition of “income investing” is broader than either Marc’s or Mark’s. From my 30,000-foot view of the investment universe… I see many other ways to solve the puzzle of high income investing.
The Secret? Diverse Sources of Income
Investing in reliable blue chip stocks that pay high dividends – like the “Dividend Aristocrats”- is one way to generate steady, stable income.
But don’t overlook the bevy of other ways to generate investment income.
Real estate investment trusts invest in commercial real estate portfolios that generate income in myriad ways.
Municipal bonds generate mostly tax-free income from bonds issued by governments to fund critical local projects such as schools, highways and bridges.
Business development companies often generate double-digit yields by investing in, or lending to, small firms.
Other sources of income include energy-related master limited partnerships, U.S. or foreign high-yield bonds, U.S. dollar-denominated sovereign debt, preferred stocks, or even ETFs that generate income from covered call option strategies.
The Oxford Wealth Accelerator Income Portfolio
Yet, up until recently, the challenge with this diverse approach to income investing has been this: Managing this kind of diverse portfolio would take more hours than there are in a day.
But the good news is this: Today, there are ETFs for each of these approaches to generating income. And you can invest in them at the click of a mouse.
That’s why we are adding just such an income ETF portfolio to my Oxford Wealth Accelerator trading service.
The benefits of this approach are clear…
First, by investing in a portfolio of diverse strategies, you’re not relying on a single source of income. You’re virtually assured of generating income no matter the state of the market.
Second, you’re generating much higher income than the U.S. stock market. In fact, the current Oxford Wealth Accelerator Income Portfolio yields 6.63%.
That’s more than triple the current 1.85% yield on the S&P 500.
So if you are currently a subscriber to Oxford Wealth Accelerator, keep an eye out for more ETF recommendations in the new Income Portfolio.
And if you are not yet a subscriber but are intrigued by high income investing, I invite you to join the Oxford Wealth Accelerator ETF service today.
Interested in hearing more from Nicholas? Follow @NickVardy on Twitter!