What is an income generation approach?
Income generation focuses on building a portfolio of investments that aim to pay a monthly income. Selecting dividend stocks and bonds that increase faster than the rate of inflation, can potentially provide investors with regular income, which can help pay for everyday commodities including household bills, food expenses, healthcare, tuition, and holidays. We believe, however, that it is important to combine this with a capital growth strategy, which aims to build capital over the long-term.
Who can benefit from the income generation approach?
Income generation strategies can be suited to retirees who are looking to supplement their pension fund, or invest it further, in order to continue living comfortably from monthly dividend stocks. The benefit of capital growth vs value investing, for retirees, is that this option does not rely on longer-term strategies to gain value.
Those who have acquired a large sum of money but have no use for it right now can also benefit from investments that pay monthly dividends. This can include people who have won a big settlement, received inheritance or sold a company. By investing for income now, investors can potentially generate more money on a monthly basis and enjoy better quality of life. This strategy also provides a level of monetary security should their circumstances change.
Examples of investment income
The income generated from investments can vary, as can the level of risk. By investing across a range of asset classes, investors can build a dynamic portfolio that can help them reach their financial goals. We have compiled a short list of what stocks pay dividends every month.
1. Government, Treasury or Corporate Bonds
These may not be the best yield investments, but they are incredibly secure. By choosing one of these, you are essentially lending your money in return for a monthly income. Corporate bonds may pose an increased risk, however, the income via stock will also be higher.
2. Blue chip Stocks
These type of stocks belong to companies with a history of significant dividend growth, have a low level of volatility and a solid financial performance. Having a proven record of surviving tough market conditions, they often provide good yields with minimal risk.
3. Real Estate
This can include both owning a property or putting your money in Real Estate Investment Trusts (REITs). While investors can benefit from receiving a regular income from renting a property out or an increase in property value, the initial buy-in may not be for everyone. With REITs, one can invest lower sums and still receive a monthly income.
AXA IM’s Approach to Income Generation
At AXA IM we aim to provide an unconstrained, global, multi-asset approach, which allows us to take advantage of multiple income investment opportunities. We are committed to helping you make the best investments for income generation with robust solutions, risk monitoring and flexible asset allocation.