Finding income continues to be the name of the game for many investors as interest rates continue to remain at paltry levels. Traditional sources such as money markets, CD's and treasury bonds barely provide any distributions and aren't currently beating inflation. In order to find reliable sources of income, retail investors can get an idea of how to position themselves from reading what Wall Street pros have to say. Managing $3.4 trillion in assets including its Nasdaq Composite Index Tracking ETF (Nasdaq:ONEQ), Fidelity certainly qualifies as a pro. With the bulk of these assets located in retirement accounts and workplace savings plans, the firm has spent much time tailoring its research towards those nearing or in retirement. Fidelity's latest missive gives retail investors plenty of opportunities to "reboot" their income streams.

SEE: Save Smart With A CD Ladder

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Simple, but Powerful Income Options
Given the Federal Reserve's pledge to keep interest rates effectively at zero until 2014 and the sheer number of baby boomers entering their golden years, it's no wonder why so many investors have income on the brain. However, those low rates have sent investors to all ends of the market place in order find higher yields. Fidelity predicts a less than 10% risk of another recession happening in the United States over the next few months. The group believes that certain select risk assets will outperform riskless assets such as Treasuries over the year. However, the surging returns seen for many of these assets over the last few years won't be repeated. Nonetheless, many of these assets still will provide quality income streams for investors.

Focus on Growing Dividends
Fidelity's first income idea shouldn't come as that much of a shock to investors. High quality dividend stocks remain at the top of the asset managers list. Conversely, it's not just any stock with a high yield. Only companies with strong, time-tested businesses that can increase dividend payments over time should be considered by investors. By choosing firms with strong economic moats and a history of rising dividends, investors are able to stay the hand of inflation on their income streams. Rival Vanguard offers the Vanguard Dividend Appreciation ETF (ARCA:VIG). The fund tracks a basket of 135 different firms that have a record of increasing dividends over time. This includes holdings in IBM (NYSE:IBM) and United Technologies (NYSE:UTX). While the exchange-traded funds (ETFs) yield isn't that high (2.12%), the fund offers the potential for high dividend growth.

SEE: Build A Dividend Portfolio That Grows With You

Look Towards Asia
The asset manager also thinks investors should look towards the west for higher income. Current dividend yields in Asia are higher than those in the U.S., and have grown at a much faster rate. While the continent has often been seen as a growth element, dividends have been a major contributor to total returns and help identify well-managed companies in Asia. The iShares Asia/Pacific Dividend 30 (ARCA:DVYA) allows investors to bet on a basket of 30 different high yielding stocks across developed Asia. Australia takes the top spot at 45% of assets, with Hong Kong, Singapore, New Zealand and Japan rounding out the exposure. The fund currently yields 4.82%. Likewise, Fidelity sees opportunity in Asian debt. The easiest way to gain access is still the WisdomTree Asia Local Debt ETF (ARCA:ALD).

Take More Credit Risk
In order to gain more income from bond investments, portfolios can either take on more interest rate risk (buy longer maturing bonds) or credit risk. Fidelity believes the best solution is to buy the latter. There's no guarantee that the Fed will actually wait until 2014 to begin tightening rates. It may come sooner than investors think. To that end, Fidelity says keep maturities short. Both the PIMCO 0-5 Year High Yield Corp Bond ETF (ARCA:HYS) and Guggenheim Bullet Shares 2013 HY Corp Bond (ARCA:BSJD) allow investors to bet on short-term junk bonds.

The Bottom Line
For investors, suitable income remains elusive with interest rates at low levels. However, it doesn't need to be hard in order to find great sources of yield. Asset manager Fidelity breaks down some of the best places to gain income exposure today. The previous Fidelity picks along with real estate played via the iShares Cohen & Steers Realty Majors (ARCA:ICF) and convertible bonds played via SPDR Barclays Capital Convertible ETF (ARCA:CWB), make great choices.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Aaron Levitt did not own shares in any of the companies mentioned in this article.
Related Articles
  1. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  2. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  3. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  4. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  5. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  6. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  7. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  8. Stock Analysis

    Tech Stocks Vs. Financial Stocks in 2016

    Consider the arguments for allocating more of your investment portfolio to either the technology sector or the financial sector for 2016.
  9. Stock Analysis

    The Top 5 Financial Penny Stocks for 2016 (CPSS, ASRV)

    Learn about some of the most promising penny stocks in the financial services sector that investors can consider adding to their portfolio for 2016.
  10. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center