- The challenge of meeting income needs while maintaining an attractive risk profile has grown more complex, as low interest rates have sent investors piling into higher yielding equities, stretching valuations in some areas and boosting volatility in others.
- Take an expanded view of dividend investing by targeting lower yielding stocks with the potential for growth, nontraditional dividend payers like technology companies and non-U.S. dividend payers.
- Be selective with respect to higher yielding sectors, focusing on companies that meet strong valuation and financial metrics criteria.
The transformation of the investing landscape since the global financial crisis has required investors with income needs to reconsider their approach. With bond yields lingering near multiyear lows, many investors have shifted their focus to dividend-paying stocks.
But for income-seeking investors whose needs also include a measure of appreciation and a relatively attractive risk profile, the challenges today are more complex. To balance these diverse objectives, consider a multi-asset strategy with a focus on a broadening universe of dividend-paying equities.
Here are some approaches to consider when seeking income, return potential and relatively low volatility: