Trying to interpret what the markets are doing can be just as crazy-making as attempting to predict what’s happening. That’s why it might be necessary to add in some income-producing ETFs along with the risky funds.
The always insightful Gary Gordon at ETF Expert has a few favorite income-producing ETFs, ranging from bonds to low-volatility funds holding preferred stocks and more. These are a few places where income can be found. As always, there are many more ETFs beyond what’s listed here. By using a screener, such as ETF Desk’s, you can narrow down the funds that pay the highest yield and find even more opportunities.
Low Volatility. He notes that funds like JP Morgan Alerian MLP (NYSEARCA:AMJ) and PowerShares Financial Preferred (NYSEARCA:PGF) have handsome yields. PGF’s yield right now, in fact, is 8.6%. iShares Dow Jones S&P U.S. Preferred Stock (NYSEARCA:PFF) yields 5.9%.
Junk. While high-yield bond funds might mean higher risk, they often tend to pay among the most handsome yields around. iShares iBoxx $ High Yield Corporate Bond (NYSEARCA:HYG) and SPDR Barclays High Yield Bond (NYSEARCA:JNK) are currently yielding 9.6% and 12.2%, respectively.
Muni Bonds. Investors who don’t want to minimize their tax exposure may want to consider muni bonds, which are exempt from federal taxes; in some cases, they’re exempt from state and local taxes, as well. Powershares Insured Muni (NYSEARCA:PZA) and Market Vectors High Yield Muni (NYSEARCA:HYD) yield 4.8% and 6% respectively; that’s before you factor in the tax-equivalent yield, which varies depending on the tax rate.
Utilities. The utility sector is another famed for its income-production potential. PowerShares Dynamic Utilities Portfolio (NYSEARCA:PUI) is yielding 8.3% right now.