For most investors, "fixed income" means bonds, which in turn means a full service brokerage account and all of its attendant fees. Yet, a wide variety of fixed-income offerings are available to those who don't have access to a bond desk and still desire annual returns in the 5-9% range. The vast majority of these offerings trade on major exchanges and may include features that render them even more advantageous than plain vanilla bonds. Read on for a quick survey of these products - along with thumbnail explanations of what to be aware of when purchasing them. (Compare full-service versus doing it yourself by reading Full-Service Brokerage Or DIY?)

Common Stocks for Income
Real estate investment trusts (REITs) are companies that own and operate income-producing properties such as shopping centers, offices and apartments. They pay nearly all of their taxable income to shareholders and consequently offer regular, high-yielding payouts to investors. However, investors should be aware that dividends paid by REITS do not qualify for the reduced tax on dividends. Consider holding these in a non-taxable account. (Read Which Retirement Plan Is Best? for information on non-taxable accounts)

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Master limited partnerships (MLP) are typically resource-related companies (primarily oil and gas) in which the advantage resides in the companies' "pass-through" financial status. This is to say that all income, gains, losses and taxable events pass through to the unit holder (you). These shares are not eligible for regular dividend tax treatment. You should consider holding these in non-taxable accounts. (For a more in-depth review of MLPs, take a look at Discover Master Limited Partnerships)

Royalty trusts are securities that have a paying interest or royalty in a specific group of assets, and pay out a portion of those moneys to unit holders. Most of these trusts are oil and gas related. These trusts pay regular, variable dividends, depending upon the profitability of the underlying assets. U.S. royalty trusts will see diminishing returns over time, as their underlying assets waste away, whereas Canadian royalty trusts are structured to renew their holdings and therefore operate more like traditional oil and gas companies. At present, U.S. trusts are not eligible for dividend tax treatment. Check with your advisor regarding tax treatment on Canadian royalty trusts.

A business development company (BDC) is essentially a mutual fund that invests exclusively in private companies rather than publicly-traded ones. Investors can therefore participate in the world of private equity without being "accredited" investors, and still enjoy the liquidity of a traditional mutual or closed-end fund.

Closed-end funds are mutual funds with a fixed number of units that trade on the stock market. Many of these are invested in income producing securities like municipal bonds or preferred shares. Investors should be aware that the price at which a closed-end fund trades may be above or below its net asset value (NAV). Tax treatment will vary depending upon the fund's holdings.

Index exchange-traded funds (Index ETFs) are instruments that seek to mirror the performance of a single market index. Therefore, these ETFs allow an investor to buy or sell shares in a widely quoted government or corporate bond index. There are also ETFs that mirror several municipal bond and junk bond indexes. Fees are generally very low on ETFs, and annual taxable capital gains are minimal. (If you're unfamiliar with ETFs, refer to Mutual Fund Or ETF: Which Is Right For You?)

Preferred Stocks
Preferred stocks are traditionally structured as perpetual preferreds, which means that they have no stated maturity date. More recently, however, companies have started issuing redeemable preferred shares that have a specific lifespan, after which they are redeemed at par value or, at the issuer's option, at a premium to their current value. Most preferred dividends receive favorable tax treatment, except those issued by REITs, and are senior to the company's common shares. (For more info, check out A Primer On Preferred Stocks.)

Exchange-Traded Debt Securities
Exchange-traded debt securities (ETDS) are "bonds" that trade like preferred shares, meaning that they have all the features of bonds, but are available for purchase on the major exchanges. They usually have par values of $25 instead of $1000, and pay interest, not dividends. ETDSs are therefore not eligible for favorable dividend tax treatment. Investors should be aware that most are callable after five years.

Convertible Preferreds
Convertible preferreds are unique, as they are convertible into the issuer's underlying common stock. They have the advantage of a higher dividend payout and the potential for capital gains should the underlying common shares appreciate. The higher yields also cushion any downside in the common shares. Be wary of "forced" conversion terms and any call features. Dividends from most convertible preferreds are eligible for the lower tax rate.

Mandatory Convertible Securities
Mandatory convertible securities go by a number of names, including equity units, equity security units, ACES, DECS and FELINE PACS. Mandatory convertibles are like convertible preferreds, except that they have a fixed conversion date and are convertible into the issuer's common stock at variable rates - depending upon where the common shares trade at the time of conversion. Mandatories generally pay better than regular preferreds, but are not eligible for favorable dividend tax treatment. Be sure to read the prospectus very carefully. (Check out The Mandatory Convertible: A "Must Have" For Your Portfolio? for further reading.)

Trust Preferred Securities
Trust preferred securities are an ingenious way for companies to raise funds under more favorable tax terms. They are essentially debentures with proceeds that are paid out to investors in the form of preferred share dividends. Investors should be aware that (despite the often generous payouts) debentures are usually at the low end of the credit totem pole, and payouts may be deferred until the redemption date of the security. Even though investors have not received dividends, they may still be required to pay taxes on the dividends, and trust preferreds are not eligible for the lower dividend tax rate. Payouts are normally higher than regular preferred shares.

Third-Party Trust Preferreds
Third party trust preferreds (TPTP) are repackaged preferred share and debt issues which are distributed by Wall Street's major brokerages. They go by a host of acronyms, including: CABCO Trusts, Corporate Backed Trust Certificates (CBTC), CorTS, PCARS, PPLUS, SATURNS, STEERS and TRUCs. Distributions are usually paid semi-annually. Investors should be aware that these securities are usually callable after five years, and are not eligible for the 15% dividend tax rate.

Conclusion
For income investors who require safe, fixed distributions for a predetermined period, the above investments offer an important alternative to bonds. As these trusts trade on major exchanges, they also offer transparent and stable pricing. Income investing is no longer limited to those with big name brokerage accounts. There's also a lot of opportunity for the small online investor. (In addition, be sure to take a look at Common Mistakes By Fixed-Income Investors to avoid costly errors.)