By Embarking Thoughtfully
An era when trailblazers traversed insurmountable odds to carve paths through the world’s wilds long preceded a time of SUVs or middling basketball teams bearing the name. The world still craves those ready to pioneer new terrains, make bold discoveries, or revisit forgotten landscapes.
Opposition scoffing at immediate income investing in the financial realm often relegates dividends to the sidelines. Yet, irrefutable evidence from retirees and our portfolio’s stellar performance attests to the unparalleled stability and bountiful income stream from being an income investor, unfazed by economic turmoil.
Today, let’s explore two exceptional funds that can anchor an income portfolio and soar in times of decreasing interest rates, ensuring not just a robust income stream but also substantial capital gains buffer.
Selecting #1: RNP – Yield 8.9%
Cohen & Steers REIT & Preferred Income Fund (NYSE:RNP) is a Closed-End Fund (CEF) delving into sectors hit hard by rising interest rates. RNP’s strategy evenly splits investments between REITs and preferred shares.
RNP’s REIT portfolio boasts exposure to top-grossing, renowned REITs, ensuring a diverse, reliable income stream. Its preferred portfolio predominantly comprises banking and insurance investments, crafting a robust, well-diversified portfolio.
Both REITs and preferred shares typically witness price declines during rate hikes, with RNP’s NAV and trading discount reflecting this downturn. This slump presents a ripe opportunity for a lucrative rebound once the discount diminishes and NAV climbs.
Choice #2: PFFA – Yield 10.5%
Virtus InfraCap U.S. Preferred Stock ETF (NYSEARCA:PFFA) operates as a preferred stock ETF under CEF style, uniquely leveraging returns and engaging in active management to shield investors from the adverse effects of rising interest rates.
- PFFA’s judicious use of leverage, coupled with savvy active management, has yielded impressive total returns, defying the downward spiral typically witnessed in fixed-income markets during rate hikes.
- By steering clear of low-yield, overpriced preferred shares, PFFA’s sector allocation, particularly its minimal exposure to low-yielding financial preferreds, speaks volumes about its prudent investment strategy.
Averaging a positive total return despite the tumultuous bond market substantiates PFFA’s ability to outperform its index and peers, reinforcing its commendable track record in navigating adverse financial climates.
Conclusion
In an environment where fixed-income and REITs face desertion, PFFA and RNP offer an unparalleled opportunity. While others flee, we embrace the allure of staggeringly high yields and substantial monthly distributions, reaping the rewards of resolute market strategies, for the savvy investor stays afloat as others veer off-course.
Embrace the beauty of income investing, where the market’s resonance fills our coffers, ensuring a lifetime of splendid retirement!
