Here’s a High-Yield Investing Strategy That Actually Works

Income Investing
by Tim Plaehn
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My Dividend Hunter service focuses on building a stable and growing income stream from a diversified portfolio of high-yield investments. I am often questioned about which one, two, or three on the recommended portfolio are the best to buy now. The year-to-date portfolio results show that cherry-picking stocks is not the way to go.

Let me explain…

I work to balance the Dividend Hunter portfolio across a handful of high-yield sectors. These sectors include finance real estate investment trusts (REITs), equity REITs, energy midstream, business development companies (BDCs), closed-end funds (CEFs), and, in recent years, option strategy ETFs.

Over time, returns will even out to be close to the average yield plus dividend growth. However, in the short to intermediate term, results can vary wildly. This year, investment returns in the Dividend Hunter portfolio have ranged from a minus 17% to a positive 40%.

The portfolio is divided into three groups: Stable Dividend Investments, Variable Dividend Investments, and Fixed Income investments. Through the end of November, all three groups had nicely positive year-to-date average total returns.

Stable Dividend Investments are the core of the Dividend Hunter portfolio and strategy. The included stocks and funds account for more than half of the total number of recommended investments.

For 2023, the Stable Dividend Investments have performed very well. The 16 investments in the category have a current average yield of 9.1%. The yield does not include the supplemental dividends the BDCs, particularly, have been paying this year.

The group’s average total return is 18.1%. That is very comparable to the S&P 500 this year. The exception is that half the return has been from cash dividends.

Total returns will swing from year to year. That is the nature of the stock markets.

I constantly remind Dividend Hunter subscribers that the goal is to invest to earn a stable, high-yield, and growing income stream. You can count on dividends. Depending on stock appreciation may produce disappointment just when you need those gains.The Dividend Hunter strategy works. If you are looking for a plan that will give you attractive returns and stability for the long run, try it.

Author: Tim PlaehnTim is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory focused on creating a high-yield income stream and it's companion service The Dividend Hunter Insiders, Weekly Income Accelerator, a covered call trading service, and for investors looking for long-term total returns from their income investments using stocks with ever-growing dividend payments, he offers Monthly Dividend Multiplier. He co-edits POWR Income with Jay Soloff. Prior to his work with Investors Alley, Tim was a stock broker, a Certified Financial Planner, and F-16 Fighter pilot and instructor with the United States Air Force. During his time in the service he was stationed at various military locations in the U.S., Europe, and Asia. Tim graduated from the United States Air Force Academy with a degree in mathematics. In his free time he tours the United States parks, campgrounds, and wilderness areas in his travel trailer.
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