High Income

Moderate Income

Maximizing current yield from multiple sources — high-yield bonds, preferred stocks, REITs, and dividend equities. Designed for investors who need cash flow now rather than total return later.

5
ETFs
4.5%
Aggregate Yield
$39.5B
Wtd Avg AUM

Holdings

Symbol Name Weight Price 1D 3M YTD Yield AUM
SCHD Schwab US Dividend Equity ETF 25% $30.57 ... ... ... 3.5% $84.9B
HYG iShares iBoxx $ High Yield Corporate Bond ETF 20% $79.96 ... ... ... 4.9% $16.7B
VNQ VNQ 20% ... ... ... ... — —
PFF iShares Trust iShares Preferred and Income Securities ETF 15% $30.78 ... ... ... 4.6% $13.6B
VCIT Vanguard Intermediate-Term Corporate Bond ETF 20% $82.95 ... ... ... 4.0% $64.4B

Investment Thesis

This portfolio is built for income, not growth. It diversifies yield sources across five different asset classes, each with different drivers and risk profiles. Dividend equities (SCHD) provide growing income from corporate profits. High-yield bonds (HYG) offer credit spreads above treasuries. REITs (VNQ) generate income from property rents. Preferred stocks (PFF) pay fixed dividends with bond-like characteristics. Corporate bonds (VCIT) provide investment-grade income with moderate duration. The diversification matters because these income sources don't all move together — when equity dividends get cut in a recession, bond income often increases as rates fall. The blended yield of ~4.5% significantly exceeds what a money market or treasury-only approach provides, though with more principal volatility.

Portfolio Construction

SCHD Schwab US Dividend Equity ETF
25%
Dividend equity anchor — provides growing income from high-quality US companies. Unlike bonds, equity dividends tend to grow over time, providing a natural inflation hedge.
Yield: 3.5% AUM: $84.9B
HYG iShares iBoxx $ High Yield Corporate Bond ETF
20%
High-yield corporate bonds — bonds rated below investment grade that pay higher coupons to compensate for credit risk. Yields 5-7% with equity-like risk during credit crunches.
Yield: 4.9% AUM: $16.7B
VNQ VNQ
20%
REIT income from real estate — REITs are required to distribute 90% of taxable income, making them reliable income generators. Diversified across office, residential, industrial, and data center properties.
PFF iShares Trust iShares Preferred and Income Securities ETF
15%
Preferred stock income — hybrid securities that pay fixed dividends and sit between bonds and common stock in the capital structure. Yields 5-6% with less volatility than common stock.
Yield: 4.6% AUM: $13.6B
VCIT Vanguard Intermediate-Term Corporate Bond ETF
20%
Investment-grade corporate bonds — higher yield than treasuries with modest credit risk from companies like Apple, JP Morgan, and Microsoft. The most conservative income source in the portfolio.
Yield: 4.0% AUM: $64.4B

Key Considerations

  • High-yield bonds carry credit risk — defaults increase during recessions
  • REITs and preferred stocks are rate-sensitive and can fall significantly when rates rise
  • Total return may lag growth-oriented portfolios in bull markets
  • Income stream can fluctuate as dividend and coupon payments change
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