Dividend stocks, high-yield bonds, MLPs and REITs remain popular choices for income-staved investors.
ETFs that offer one-stop shopping for yield-starved investors, commonly known as multi-asset ETFs, are also becoming part of the income lexicon.
The Guggenheim Multi-Asset Income Index ETF (NYSEArca: CVY) is one of the largest multi-asset exchange traded funds, offering income investors one-stop shopping to an array of income-generating asset classes.
CVY tracks the Zacks Multi-Asset Income Index, which “uses quantitative analysis to select stocks from the Index universe to obtain a representative sample of stocks that resemble the Index in terms of key risk factors, performance attributes and other characteristics,” according to Guggenheim.
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Securities currently held by CVY include common stocks, master limited partnerships (MLPs), real estate investment trusts (REITs), closed-end funds and preferred stocks.
“Performance for CVY has been mixed — beating the market handily in some years and losing out in others. But for those investors looking to buy, hold and collect the dividend for the long haul, it’s a pretty good fund,” according to Kiplinger.
There is some interest rate risk investors need to be aware with CVY and other multi-asset ETFs.
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Multi-asset ETFs are now exposed to interest rate risks as many of their underlying holdings are sensitive to rate changes.
For instance, higher short-term rates increases funding costs for REITs, and higher long-term rates could raise book values for existing mortgage REITs. If rates rise, the cost of capital for MLPs would also increase, which would lower distributions on the asset and make the play less attractive.
Other multi-asset ETFs include the First Trust NASDAQ Multi-Asset Diversified Income Index Fund (NasdaqGM: MDIV), iShares Morningstar Multi-Asset Income Index ETF (NYSEArca: IYLD) and the Arrow Dow Jones Global Yield ETF (NYSEArca: GYLD).
“In the end, investors have a dividend ETF that is a one-stop shop for all the “weird” dividend stocks that the market has to offer. Betting on “weird,” however, is also good for income. And CVY kicks out a hefty 5.08% dividend yield,” adds Kiplinger.