Exchange-traded funds have solved the predicament facing retirees who need investment income in a world of low interest rates. Several ETFs in the Claymore and iShares families now provide monthly payments of bond interest and dividends. Combine them in the right way and you get a diversified retirement income portfolio with a yield above 4 per cent. “Everybody wants yield, but in today’s market it’s hard to find,” said Pat Chiefalo, an ETF specialist at National Bank Financial.
Not just income, but monthly income. It’s much easier to manage your cash flow as a retiree if you’ve got investment income coming in each month, rather than every quarter or semi-annually. Many mutual funds pay income monthly, and now ETFs are starting to do the same. Blended together, the ETFs in the Monthly Yield Portfolio produce a flow of cash with a yield of about 4.4 per cent. This is achieved by judiciously mixing ETFs based on dividend stocks with bond ETFs. The overall mix is 33.7 per cent government and corporate bonds, 11.3 per cent preferred shares, 44 per cent dividend stocks and the rest in real estate investment trusts and high-yield bonds
Source: Globe and Mail
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