Generating Income from Investments

 

Turn investments into a potential source of income

Investors who are looking to generate income from their investments, have many possibilities to consider beyond bonds and other fixed income securities. Dividend-paying stocks, mutual funds, and even some nontraditional investments, such as REITs, can also be a potential source of income. Adding one or more of these investment types to a portfolio may help an investor meet monthly expenses, or plan for longer term goals like saving for college or retirement.
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High-yield bond funds

High-yield bond funds concentrate on lower-quality bonds, which may offer the higher yields but are significantly riskier than bonds of better quality. While they offer high yields, these funds are more vulnerable to economic and credit risk.
 

Mutual Funds

Fund Name / Symbol
Overall Morningstar
Rating
Fund
Category
Total Net
Assets
Yield
Net Expense
Ratio
 

ETFs

Data as of ET
Fund Name / Symbol
Overall Morningstar
Rating
Category
Market Price
Today's %
Change
Expense
Ratio

Intermediate-term fixed income funds

Intermediate-term bond funds invest primarily in corporate and other investment-grade U.S. fixed-income securities and tend to have average effective maturities of four to ten years. These funds tend to be less sensitive to interest rate changes, and are therefore less volatile, than longer-term bond funds.
 

Mutual Funds

Fund Name / Symbol
Overall Morningstar
Rating
Fund
Category
Total Net
Assets
Yield
Net Expense
Ratio
 

ETFs

Data as of ET
Fund Name / Symbol
Overall Morningstar
Rating
Category
Market Price
Today's %
Change
Expense
Ratio

Large-cap dividend paying stock funds

Investors seeking income from stocks may consider large-cap value funds that invest primarily in big U.S. companies with a history of paying dividends. Most of these stocks tend to have relatively low valuations and steady growth potential. Dividend paying investments may not experience the same price appreciation as non-dividend-paying investments. In addition, dividend-issuing companies may choose not to pay a dividend, or the dividend may be less than what is anticipated.
 

Mutual Funds

Fund Name / Symbol
Overall Morningstar
Rating
Fund
Category
Total Net
Assets
Yield
Net Expense
Ratio
 

ETFS

Data as of ET
Fund Name / Symbol
Overall Morningstar
Rating
Category
Market Price
Today's %
Change
Expense
Ratio

Real estate funds

Real estate funds invest primarily in real estate investment trusts (REITs) - companies that develop and manage real estate properties. There are several different types of REITs, including ones that focus on apartments, factories, hospitals, hotels, mortgages, offices, and shopping centers. These funds may invest in real estate operating companies as well.
 

Mutual Funds

Fund Name / Symbol
Overall Morningstar
Rating
Fund
Category
Total Net
Assets
Yield
Net Expense
Ratio
 

ETFs

Data as of ET
Fund Name / Symbol
Overall Morningstar
Rating
Category
Market Price
Today's %
Change
Expense
Ratio

Short-term fixed income funds

Short-term bond funds have average maturities of one to five years, making them a consideration for conservative investors seeking a relatively stable source of income. These funds invest in a variety of bonds, from the most creditworthy, such as U.S. Treasury bonds, to mortgage securities and corporate issues.
 

Mutual Funds

Fund Name / Symbol
Overall Morningstar
Rating
Fund
Category
Total Net
Assets
Yield
Net Expense
Ratio
 

ETFs

Data as of ET
Fund Name / Symbol
Overall Morningstar
Rating
Category
Market Price
Today's %
Change
Expense
Ratio

World bond funds

World bond funds invest 40% or more of their assets in non-U.S. bonds. Some world bond funds follow a conservative approach, favoring high-quality bonds from developed markets. Others are more adventurous, and own some lower-quality bonds from emerging markets. As a result, the risk and return potential of these funds varies greatly.
 

Mutual Funds

Fund Name / Symbol
Overall Morningstar
Rating
Fund
Category
Total Net
Assets
Yield
Net Expense
Ratio
 

ETFs

Data as of ET
Fund Name / Symbol
Overall Morningstar
Rating
Category
Market Price
Today's %
Change
Expense
Ratio

Fund selection criteria: The funds displayed are not a recommendation by E*TRADE Securities or its affiliates to buy, sell or hold any security, financial product or instrument nor is it an endorsement of any specific security, company, fund family, product or service. All screens display funds within the respective category and group. All mutual fund screens exclude funds not open to new investors, exclude funds that have expense ratios greater than 2% and only include NLNTF mutual funds with initial investment minimums of $5,000 or less. All ETF screens exclude exchange traded notes and leveraged ETFs. The top performing funds, based on 3 Year total return, within the various category screens are shown in the initial display along with the all the NLNTF All-Star funds of the corresponding category. All funds in the initial display are ranked by 3 Year total return.

All mutual fund screens exclude funds not open to new investors and only include mutual funds with initial investment minimum less than $5,000. All ETF screens exclude exchange traded notes and leveraged ETFs.

All funds within the respective group can be seen by clicking on the hyperlinked/button section in the phrase “X of X results”, "See More Mutual Funds", or "See More ETFs.

The Morningstar RatingTM for funds is calculated for management investment company products registered under the Investment Company Act of 1940 (including mutual funds, exchange-traded funds and closed-end funds) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are analyzed as a single product category for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.

The All-Star List is a quarterly list of leading funds and ETFs selected by E*TRADE Capital Management, LLC. Funds selected for the All-Star List are selected from the no-load mutual funds offered through E*TRADE Securities.

All-Star Funds typically have at least a three year track record and compare favorably against their peers based on historical return, risk, expenses, manager tenure, performance and style consistency, asset size and growth and must be 1) structured through sound investment philosophy and process, 2) implemented with acceptable level of investment risk management strategy and 3) supported by a reputable investment firm. To view the fund's Report Card with additional performance metrics, including standardized quarterly results, please click on the fund name.
Expense ratios are provided by Morningstar and are based on information obtained from the ETF's last audited financial statement. Current expense ratios for the ETFs may be different.
Yield is a measure of the fund's income distributions, as a percentage of the fund price. Morningstar calculates this figure by summing the income distributions over the trailing 12 months and dividing that by the sum of the last month's ending NAV plus any capital gains distributed over the 12-month period.
For a definition of terms, please click on the Data Definitions link. Data definitions provided by Morningstar. Quotes may be delayed by at least 15 minutes. Quotes and other information supplied by independent providers identified on the E*TRADE vendor disclosures page
Data provided by Morningstar, Inc.

Expense ratios are provided by Morningstar and are based on information obtained from the ETF's last audited financial statement. Current expense ratios for the ETFs may be different.
Yield is a measure of the fund's income distributions, as a percentage of the fund price. Morningstar calculates this figure by summing the income distributions over the trailing 12 months and dividing that by the sum of the last month's ending NAV plus any capital gains distributed over the 12-month period.

For a definition of terms, please click on the Data Definitions link. Data definitions provided by Morningstar. Quotes may be delayed by at least 15 minutes. Quotes and other information supplied by independent providers identified on the E*TRADE vendor disclosures page
Data provided by Morningstar, Inc.

There are risks involved with dividend yield investing strategies, such as the company not paying a dividend or the dividend being far less than what is anticipated, as well as market risk, price volatility, liquidity risk, risk of default, and risk of loss.

Dividend Yields provide an idea of the cash dividend expected from an investment in a stock. Dividend Yields can change daily as they are based on the prior day's closing stock price. There are risks involved with dividend yield investing strategies, such as the company not paying a dividend or the dividend being far less than what is anticipated. Furthermore, dividend yield should not be relied upon solely when making a decision to invest in a stock. An investment in high yield stock and bonds involve certain risks such as market risk, price volatility, liquidity risk and risk of default.

Investing in Commodities, Real Estate Investment Trusts (REITs), and International or Global investments carries certain risks such as price volatility, currency risk, market risk, interest rate risk and credit risk. An investor should fully understand these risks before making an investment.

Investment in real estate investment trusts (REITs) is subject to many of the risks associated with direct real estate ownership and, as such, may be adversely affected by declines in real estate values and general and local economic conditions.

All bonds are subject to interest rate risk and you may lose money.

Bonds sold by issuers with lower credit ratings may offer higher yields than bonds issued by higher rated or "investment grade" issuers, but are usually associated with higher risks. High-yield bonds, also known as "junk bonds", generally have a greater risk of default, which increases the risk that an issuer may be unable to pay interest and principal on the issue. In addition, high-yield bonds tend to have higher interest rate risk and liquidity risk, particularly in volatile market conditions, which makes it more difficult to sell the bonds. Before investing in high-yield bonds, you should carefully consider and understand the risks associated with investing in high-yield bonds.

Fluctuations in interest rates may cause investment prices to fluctuate. For example, when interest rates rise, yields on existing bonds become less attractive, causing their market values to decline.

High-yield, non-investment-grade bonds involve higher risk than those that invest in investment-grade bonds. Adverse conditions may affect the issuer’s ability to pay interest and principal on these securities and, as a result, they may have a higher probability of default.

Debt obligations are subject to credit risk, as they can be downgraded by rating agencies, go into default, or affected by management action, legislation, or other government actions that may in turn reduce the issuers’ ability to pay principal and interest when due.

The government guarantee for U.S. Treasuries relates only to the prompt payment of principal and interest and does not remove market risks. The value of these securities is subject to fluctuations prior to maturity.

Think Outside the Bond

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