Low yields, compounded by the market’s steep dive this week, are prompting investors—particularly Baby Boomers—to seek income beyond the traditional sources, The Wall Street Journal reports. That’s means they’re not just looking at dividend-paying stocks and long-term Treasury bonds but at exotic offerings, such as foreign real estate investment trusts, publicly traded energy partnerships and dividend-capture funds.
The latter invest in dividend-paying stocks long enough to qualify for the next dividend payment, and then they cash out.
But investors are overlooking the important factor of increased risk. Foreign investments are subject to political upheaval and currency fluctuations, and rapid trading increases operating costs, thereby lowering returns. And while payouts from partnerships are considered a tax-deferred return of capital, experts believe the government could change their tax advantages.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.