With the economy not recovering fast enough, the Federal Reserve will most likely keep interest rates at low levels for quite awhile. These low rates, although designed to spur economic activity, have the potential to derail and punish those who need them to be high: retirees. Many traditional sources of income such as certificates of deposit (CDs) and bond funds like the iShares Barclays 1-3 Year Treasury Bond (NYSE:SHY) are paying next to nothing. As many Baby Boomers begin the transition into retirement, finding sources of reliable income becomes ever more important.
IN PICTURES: SPY) is only 1.86%. For many, that might not be enough. The proliferation of exchange-traded funds (ETFs) has made it possible for portfolios to ratchet up their income, while adding some diversification benefits. New asset categories, once reserved for institutional investors, are now available for retail investors. Here are some ways to add that extra income. (To learn more about the importance of dividends, see How And Why Do Companies Pay Dividends?)

Real Estate Barons
Real estate investment trusts (REITs) have traditionally been a source of income since their creation. Most investors are familiar with equity REITs, or those that invest in and own properties. These companies own shopping malls, office buildings and warehouses, and then collect rent from tenants. Less than 10% of the sector falls into the category of mortgage REITs. Companies like Capstead Mortgage (NYSE:CMO) or Chimera Investment (NYSE:CIM) loan money to owners of real estate or more commonly, purchase existing mortgages or mortgage-backed securities (MBSs). However, individually these securities can be hard to evaluate. The iShares FTSE NAREIT Mortgage Plus Capped Index (NYSE:REM) follows a basket of 52 mortgage REITs as well as banks with strong mortgage operations. For the added risk, investors are rewarded with a 10.58% dividend yield.

A Preferred Payout
Investors looking for yield and some stability might want to take a look at preferred stocks. Crossing the stock-bond tight rope, these assets in exchange for zero voting rights, get a steady stream of dividend payments and preference in bankruptcy situations. Individual preferred stocks are exchange traded, but ETFs make adding the sector easy. The SPDR Wells Fargo Preferred Stock (NYSE:PSK) follows a basket of 159 different issues and currently yields just over 6.5%. For investors looking for a little more income out of their preferred investments, the PowerShares Financial Preferred (NYSE:PGF), which strictly focuses on issues from financial firms, yields 7.32%. (For related reading, see A Primer On Preferred Stocks.)

An Emerging Bond Play
Most portfolios have access to emerging markets through equities to gain exposure to their red-hot economic growth. Many overlook their debt markets. The appeal of playing emerging markets through their debt securities is because, unlike the U.S. or Japan, these nations often have lower debt-to-GDP ratios. For example, Brazil has an approximate 60% debt-to-GDP and for Malaysia it's around 50%. Many emerging nations also have investment-grade ratings, but pay higher yields than domestic counterparts. The PowerShares Emerging Markets Sovereign Debt (NYSE:PCY) tracks bonds from all over the developing world including South Africa and the Ukraine. The fund pays a monthly 6% dividend.

Bottom Line
With many analysts predicting another year of low interest rates, finding suitable income is still quite challenging. Nevertheless, the ETF boom has opened many higher yielding asset classes to the retail world. The previous examples are just of the few sectors that investors can find additional income and yield for their portfolio.

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