Morningstar's Investing for Income Week 2013

SPECIAL REPORT: Your one-stop-shop for all things income - learn how to get it, grow it and compound it for growth

Emma Wall 6 September, 2013 | 12:01AM
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Income is the holy grail of investing: it negates the eroding power of inflation; can help determine whether a stock has a healthy balance sheet; and, compounded - according to Einstein - even warrants the acolade of eighth wonder of the world.

In the summer of 2007, if you wanted 8% interest all you had to do was lock your cash away for a couple of years with a high street bank. No risk of capital loss, no timing the stock market - no fuss. 

Now, even in a tax-efficient cash ISA you'll be lucky to earn enough interest to match the rate of inflation. 

Ever since the Bank of England dropped its base interest rate to a record low of 0.5% four and a half years ago investors have been forced to look elsewhere for income. 

By September 2010, one in three investors was snapping up corporate bonds, with the asset class regularly topping the best buy tables for nearly two years. 

Then came the warning signs - yields looked less attractive, bond giant M&G turned down a billion-pound institutional mandate, and the Financial Services Authority wrote to fixed income managers voicing concerns about liquidity.

The so-called Great Rotation moved on, encouraging investors to move up the yield curve and consider riskier assets such as high yield bonds and equities to earn an attractive level of income. 

This week we seek to sort the proverbial wheat from the chaff and determine exactly where investors can find quality, sustainable income across a diverse range of asset classes. 

Monday: The Basics

Why income is important for all investors and the role it can play in your portfolio

The Basics of Income Investing
What is income investing and what routes to income are available to investors?

5 Tips for Avoiding Income-Investing Pitfalls
When investing for income, follow these tips to ensure you stay on the straight and narrow.

Income vs. Total Return Strategies: Why Take Sides?
Income producers are an important component of every investor's toolkit but ignore capital growth at your peril, particularly in a low-yield environment.

Why Growth Investors Should Consider Income Funds
Franklin UK Equity Income manager Colin Morton tells Emma Wall about the power of compound interest and the importance of finding a sustainable dividend

Not All Equity Income Funds are Created Equal
Investors seeking income should first familiarise themselves with the type of equity income funds available on the market

Importance of Income Growth
Income manager Job Curtis tells Emma Wall the importance of investing in strong companies with good balance sheets that offer a growing dividend

Top Rated UK Equity Income Funds Overlap by a Third
Diversifying between asset managers is not enough - if you hold too many funds in the same sector you double the risk of losing money

Tuesday: Stocks that Deliver

Income stalwarts and the young pretenders: the top dividend paying stocks 

Top 20 Dividend Paying Stocks
A well-blended portfolio of stocks from the FTSE 350 can provide investors with a diversified sustainable income for life

3 Companies that Pay a Sustainable Dividend
Colin Morton of the Franklin UK Equity Income fund picks three stocks that pay out only what they can afford to

Dividend Paying Stocks of the Future
Income investing is not all about chasing the largest headline rates - invest in low-yielding stocks now to benefit from income and capital growth

Sector in Focus: Utilities
Reliable dividend payers can be found in a wide variety of sectors, but utilities providers are often considered a good place to start your search 

Barclays to Pay 4% in 2014
Financial companies used to be the backbone of any income portfolio - but then the credit crisis hit. Morningstar analysts examine the case for Barclays

Top 5 Equity Income Stocks
Morningstar research revealed that the top rated equity income funds invest in remarkably similar stocks, we list the favourite five

3 Income Stocks
VIDEO: City of London Investment Trust fund manager Job Curtis reveals his three UK stocks for income seekers

Wednesday: Where in the World?

The FTSE is not the only index to offer investors income; we consider the US and even emerging markets

Why You Should Consider the US for Dividends
The S&P 500 index yields 2% - but a good US equity income fund manager can double that. So where can you find income across the pond?

5 US Stocks that Pay a Dividend
Income investors should consider the American stock market for diversified returns. We highlight five attractive companies

Are Emerging Markets Too Risky for Income Investors?
Emerging market equities are known for their volatility - so should they even be considered for income investing?

5 Top Rated Global Equity Income Funds
Morningstar analysts have awarded a Rating to just five global funds offering investors a dividend yield

How International is Your Global Fund?
Investors would be forgiven for thinking a global equity fund is offering international stock market exposure - but they'd be wrong

Want Diversification? Invest in Sweden
Buying Russian stocks when you have exposure to the Indonesian market is not true diversification. We reveal how seemingly uncorrelated markets move in tandem

Thursday: Fixed and Not-so-fixed Interest

Bonds are as diverse an asset class as equities - and not all are expensive. We show you how to access the great diversifier

Where Can You Still Find Value in the Bond Market?
Corporate bonds are overvalued and junk bonds look risky - but buy a strategic bond fund and the manager will do the blend for you

What is a Retail Bond?
Companies are issuing bonds to be bought directly by the investor. The headline rates look enticing but retail bonds can be risky

Verizon Set for Biggest Corporate Bond Sale Ever
In order to complete its deal with Vodafone, US telecoms giant Verizon is offering investors a chance to buy $20 billion of corporate bonds

3 Top Bond Picks
VIDEO: Ignis bond manager Chris Bowie gives three top investing tips from his asset class

High Yield Bonds Go Global
High yield credit can offer investors diversification from corporate debt - and an increasingly international exposure

Friday: Consider Alternatives

For the bold investor we suggest alternative asset classes than can offer income

How to Build an Income Portfolio
Ask the Expert: In order to provide a sustainable inflation-beating income, investors must blend all funds investing in all assets.

Top 5 Multi-Asset Income Trusts
Income investors who wish to leave portfolio construction to the professionals should consider one of these five investment trusts

Commercial Property for Income Investing
Ask the Expert: Does commercial property have a place in an income portfolio, or are the liquidity risks too great?

Improving Economy is Good for Property
In the three months to the end of June, commercial property outperformed UK equities and gilts by considerable margins

Sector in Focus: Mining, Gold and Natural Resource
The megacap miners are the biggest FTSE risers, while investors are snapping up their minor AIM listed counterparts

Top 5 Cash Isas
Inflation has fell to 2.8% last month - but there are only two cash savings accounts that beat the new rate of inflation

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Wall  is former Senior International Editor for Morningstar

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