What is 'Current Income'

Current income is associated with strategies that seek to identify investments paying above average distributions. Common types of current income can include dividends and interest. Investment portfolios across the risk spectrum can focus on investment strategies that pay high levels of current income.

BREAKING DOWN 'Current Income'

Current income investing is a strategy that can provide investors with consistent long-term distributions or payouts for short-term spending. Many long-term current income focused portfolios are often created for individuals seeking short-term spending payouts and potential for steady long-term income in their retirement years. (See also: Some Options for Those Seeking Current Income.)

To build out the benefits of current income investing in a portfolio, investors can choose individual securities or managed investment funds. Income paying securities can include stocks, bonds or a combination of both.

Equity Income Fund Investing

Dividend paying stocks offer investors higher returns generally with higher risks. As income paying investments the securities combine income with return for even greater total return. In the equity market investors will find dividend paying stocks to be among the most well-established and mature. As mature companies dividend paying stocks have steady revenue, income and earnings with established payout ratio commitments for which to pay dividends. Real estate investment trusts (REITs) are also a top investment option for investors seeking current income. REITs are required to pay distributions to investors due to their fund structuring.

Funds including these securities are also a great way to invest for current income. Funds can provide for lower risk through diversification with similar comparative levels of yield. Within the traditional yield paying equity investment fund universe, the Snow Capital Dividend Plus Fund offers one of the highest total returns. Investing approximately 80% of the portfolio in equities the fund reports a one-year total return of 11.30% with a trailing twelve-month dividend yield of 13.27%.

Debt Income Fund Investing

Debt income securities and investment funds offer an even broader universe of choices for investors since debt instruments are synonymous with paying fixed income to investors. Investors can invest in a range of local and international government offerings. They also have access to coupon paying corporate bonds from countries around the world.

Debt income funds build on these offerings by providing diversified portfolios of income paying investments. Following 2017’s higher trending returns from emerging markets, the Hartford Emerging Markets Local Debt Fund falls at the top of the high yield list for bond investors. The Fund is reporting a one-year total return of 19.23% with a trailing twelve-month dividend yield of 26.65%.

Target-Date Funds and Annuities

Investors seeking funds for long-term investing that will payout steady streams of current income in the future can also look to annuities and target-date funds. Annuities typically offer a consistent annuity payout following a specified target date. PIMCO’s RealPath target-date funds are leading the market in return and current income in the target-date category. The PIMCO RealPath 2045 Fund has a one-year return of 18.84% and a trailing twelve-month yield of 20.44%.

  1. Equity Income

    Equity income is primarily referred to as income from stock dividends. ...
  2. Portfolio Income

    Portfolio income is income from investments, dividends, interest, ...
  3. Target-Date Fund

    A target-date fund is a fund offered by an investment company ...
  4. Debt Fund

    A debt fund is an investment pool, such as a mutual fund or exchange-traded ...
  5. Income Fund

    A type of mutual fund that emphasizes current income, either ...
  6. Global Fund

    A global fund is a fund that invests in companies located anywhere ...
Related Articles
  1. Investing

    Top Income Investing Strategies for 2016

    Dividend paying stocks and equity income funds are two ways to get yield out of your investments this year.
  2. Investing

    How to Find Mutual Funds With High Dividends

    Learn about the important factors to consider when looking for mutual funds that pay high dividends, including how they may impact your taxes.
  3. Financial Advisor

    How Mutual Funds Pay Dividends: An Overview

    The process by which mutual fund dividends are calculated, distributed and reported is fairly straightforward in most cases. Here's a look.
  4. Investing

    Yield vs. Total Return: How They Differ

    Understanding yield vs. total return is essential in constructing portfolios that meet income generating needs while providing growth for the future.
  5. Retirement

    Retirees: Target-Date Funds Have Their Own Tax Issues

    The tax inefficiency of target-date funds may make them a bad choice outside of a retirement plan.
  6. Investing

    FSDIX, VDIGX, FEQTX, VEIPX: Top Dividend Paying Equity Funds

    Discover five of the best dividend-paying mutual funds that primarily invest in U.S. equities, and learn about the characteristics of these funds.
  7. Investing

    How to Get More Yield From Your Investments

    Yield seeking investors can boost the amount of income their investments generate through tweaking their portfolio of stocks and bonds.
  8. Investing

    When to Use Target-Date Funds

    Learn about the different uses for target-date funds. Understand the risks and considerations for making an investment in a target-date fund.
  9. Retirement

    SWOBX,SWDSX,SWBDX: Top 5 Schwab Funds for Retirement

    Find out which Schwab funds are best to create a diversified retirement income portfolio for current income, income growth and capital preservation.
  10. Financial Advisor

    Are Target-Date Funds Safer in a Reeling Market?

    A look at whether or not target-date funds are safer when markets are volatile.
Hot Definitions
  1. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  2. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  3. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  4. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  5. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
  6. Restricted Stock Unit - RSU

    A restricted stock unit is a compensation issued by an employer to an employee in the form of company stock.
Trading Center