Break Out the Barbell, Part 2

I wrote on Thursday about how to put together an income portfolio in this very confusing market. The Federal Reserve's Zero Interest Rate Policy the past few years has made it more difficult for investors to find the income to support their lifestyles or investment needs. I favor eschewing the current offerings and ideas from the Wall Street marketing machine and building an income barbell to secure needed investment income. The first part is to put together a portfolio of very high-yielding, alternative income selections such as REITs, BDCs and other income vehicles. As I said yesterday, buy them below asset value and buy lots of them.

The second part of the barbell is to find companies that pay a decent dividend today but have the ability and probability to grow the dividend at a very rapid rate over the next five to 10 years. The absolute level of the dividend today is not as important as the level of the payout in the future. I look at these stocks like 10-year bonds with accelerating coupons.  You have to accept that they will be far more volatile than bonds, but as long as the company can survive a decade and grow the dividend, it will provide growing income to offset the rising cost of living and potentially offer capital growth as well....650 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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