While geopolitical headlines often focus on short-term volatility in the Middle East, the long-term investment case for energy remains centered on security, reliability, and North American export dominance. Stacey Morris, CFA, head of energy research at VettaFi, recently highlighted some long-term views on energy investing beyond the current oil price spike.
REIT ETFs look low-yield, but they are skewed by growth-heavy holdings. Higher income exists, but only with selective, active REIT picking. Some overlooked REITs offer ~6% yields with strong fundamentals.
Despite significant market volatility creating seemingly attractive high yields across multiple sectors, not all income machines are created equal. I detail the factors that the market is overlooking that make Western Midstream Partners (WES) a compelling buy right now. I discuss the key factors that explain why an 11% yield is not enough to make me want to buy Capital Southwest (CSWC).
A 7% yield sounds compelling until you ask the question that separates income investing from return-of-capital illusion: where is the money actually coming from?
Most retirement income conversations start and end in the same place. The Vanguard High Dividend Yield ETF (NYSE:VYM) at 2.26%, the Vanguard Real Estate ETF (NYSE:VNQ) at around 3.5%, and maybe the Schwab US Dividend Equity ETF if someone is feeling adventurous.
The higher yields we choose, the more risks we introduce in our portfolios. Usually, the double-digit level is the tipping point from which the risks start to increase exponentially. The 14%+ yielding zone is very dangerous (packed with many landmines and only few areas of safety).
Retirement income portfolios should prioritize meaningful dividend yields to avoid principal drawdown. Predictable and frequent cash flows, ideally monthly, are essential for reliable retirement income. Stress-free investments are key to minimizing worry during adverse economic conditions and avoiding income cuts.
Oil could hit $200 if the Iran conflict drags on and Hormuz stays shut. Energy ETFs may surge but risks remain if tensions ease quickly.
Oil surge from Middle East tensions is boosting AMLP. Lasting disruption and infrastructure damage could keep prices elevated, supporting income gains.
Key Takeaways With the Fed holding rates steady and CPI remaining elevated at 2.4%, advisors are pivoting toward strategies designed to withstand sticky inflation and “higher for longer” benchmark rates. Experts suggest modern portfolios are underweight real assets.
The Alerian MLP ETF offers concentrated exposure to top North American midstream MLPs, bypassing K-1s and individual company risk. AMLP provides a robust 7.5% distribution yield with a 5-year CAGR of 6.56%, supported by disciplined capital allocation and strong distribution coverage. Structural tailwinds—Permian growth, NGL export expansion, and AI-driven gas demand—support continued cash flow and distribution growth for AMLP's holdings.
I have had to learn many lessons the hard way. High-yield investing can be very rewarding but also equally punishing. Learn from my mistakes to save yourself a lot of money.