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Searching for Yield



August 27, 2012 – Comments (3)

With investors stretching for yield, it seemed like a good idea to look for asset types generating lots of yield and review some of the risks that go with reaching.

To find the yield, I filtered the 100 highest yielding ETFs as listed by and profiled the five highest yielding funds with more than $300 mil in assets.  The five funds hold four different types of investments:
     - Mortgage REITs (the only surprise would have been if mREITs weren't on the list)
     - Closed-end funds
     - High-yielding international stocks
     - Preferred stocks

CAPS blog bonus:  The sixth highest yielding fund - AMLP - would have added Master Limited Partnerships to the mix.

As you would expect there are risks that go along with the high yields.  I did give one of the funds - DWX - a CAPS green thumb and for a change it didn't immediately start trashing my accuracy and score.

As always, your comments or questions are welcome.

Fool on!  Russ

3 Comments – Post Your Own

#1) On August 27, 2012 at 9:07 PM, awallejr (34.70) wrote:

That is where I have a good chunk of my portfolio, MLPs ( I can handle the K-1s), BDCs and Reits.

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#2) On August 27, 2012 at 10:06 PM, rd80 (94.65) wrote:

Thanks for the comment.

E-TRACS has two BDC funds,  BDCS and BDCL, at least they have Business Development in the name.  Both are tiny and I didn't look at either one.  One's a 2X just in case BDCs don't have enough pizzaz by themselves.

I think the tax hassle of dealing with MLP K-1s is exagerated.  I've now done two returns with K-1 info to report and tax software seems to handle it without a hiccup.  I haven't sold any units, so can't comment on any challenges with the cap gains calculation.

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#3) On August 28, 2012 at 12:47 PM, EnigmaDude (62.36) wrote:

Personally, I think BDCs are the way to go but of course you need to be selective (like any stock pick). I like PNNT, TCAP, and HTGC. Many of them are relatively young so there probably are not too many ETFs that consist of BDCs. MLPs have had a good run but I'm not so sure they can keep going up much longer, at least relative to the other asset classes you mention. And there are still some good mREITs out there, but again, you need to be selective.

 (you need a glossary to follow this post, I think!)

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