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Income investing is a term used to describe a style of stock-picking focusing on securities that generate a stream of cash – like traditional bonds, dividend-paying stocks and diversified investment structures that basket income-producing equities like mutual funds and ETFs.

Income investing is a strategy commonly used by risk-averse investors who gravitate toward investments with low to zero volatility or those associated with reputable companies. Its contrasting strategy, growth investing, is often chosen by investors with more tolerance for risk and a willingness to invest in less-established companies with stock prices that swing more than blue chips, with the hope that the return will be greater than the industry average. For most income investors, this strategy doesn’t fit in with their investing objectives.

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