Money

Generating Rising Income in a Rising-Rate Market

I get emails from many subscribers about how best to generate a reliable income stream that accomplishes the goals of beating the rate of inflation, isn’t at risk of price erosion because of rising interest rates and sports a yield that greatly exceeds that of the dividend aristocrat stocks and investment-grade bonds, CDs, Treasuries and money markets.

While I delve into a number of rising-rate-resistant, high-yield asset classes such as convertible bonds, energy master limited partnerships (MLPs), private equity stocks, floating-rate business development companies and aircraft leasing, nothing is working better for producing a robust stream of consistent income that outperforms in term of absolute total yield than a well-managed, covered-call strategy.

Within my high-yield buy-and-hold Cash Machine advisory service, I have positioned various closed-end covered-call funds that have just knocked it out of the park. A case in point is the Eaton Vance Enhanced Equity Income Fund II (EOS), which has been a rock star for income investors.

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