Never mind that interest rates have been on the rise. It hasn't
helped income oriented investors much, because millions of retirees
and dividend focused individuals still aren't generating adequate
income from their investments.
As U.S. stocks march ahead into nosebleed territory, the
12-month dividend per share yield on the S&P 500 (NYSEARCA:IVV)
is just 1.91%. That's a far cry from the 5.22% dividend peak for
the S&P back in January 1978.
What about Treasury bonds?
The 10-year Treasury yield (^TNX) trades near 2.75% and will
give you almost 1% more in yield than the S&P 500's current
yield. But even at that depressed yield, it would take an investor
26 years to double their money. Think about it this way; if you're
40 years old, you'll have to wait until age 66 to double your cash.
Can you wait that long?
We know that investment income has been clobbered by low
interest rates, but even household income is down
The median American household made just $51,017 last year (See
chart below) compared to $51,720 in 1996. That means the typical
middle class family earned more money 16 years ago than it does
Hasn't the Federal Reserve's QE made the economic climate
The answer is "no" as measured by household income. Since 2008 -
when the Fed began ramping up QE stimulus - median incomes are down
around 5%. Cleary, the hot money from QE hasn't benefited the
broader economy or middle class in a meaningful way.
Adding Fire Power
Aside from investing money in higher dividend yielding sectors like
utilities (NYSEARCA:XLU), MLPs (NYSEARCA:AMJ) or REITs
(NYSEARCA:VNQ), selling covered call options on a portfolio is
another way to increase monthly cash flow.
This is exactly what our ETF Income Mix Portfolio does. Each
month we sell covered calls on ETFs that track major investment
By using this technique, not only are we able to collect
dividends (NYSEARCA:DVY) from the underlying ETFs, but we also
generate income from the options.
Today's extremely distorted interest rate marketplace requires an
extreme response. That means adding high octane income strategies
like selling covered calls along side traditional income
strategies of buying dividend assets.
Over the past year, our
has generated around $10,400 or $866 per month, based upon a
$100,000 all-ETF portfolio. Each month we tell readers the best
combination of ETF covered call options to sell.
Although selling covered calls puts a collar or limit on any
potential capital gains, the monthly cash flow we get helps us to
achieve our primary investment objective: More income with less
Profit Strategy Newsletter
uses technical, fundamental, and sentiment analysis along with
market history and common sense to keep investors on the right side
of the market. Since the beginning of the year, 74% of our weekly
ETF picks have been winners. (through Q3 2013)
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