DEFINITION of 'Income Investment Company'

A money management firm whose primary investment goal is to generate income from its investments for its clients. An income investing company typically aims to produce a level of income for its portfolios through investment in bonds and dividend paying stocks. Additionally, preferred shares and other sources of income may be used by fund managers of income investment companies, to generate cash flow.

BREAKING DOWN 'Income Investment Company'

Income generating securities typically involve a lower level of risk for investors, as predictable cash flows reduce such risk levels, while limiting large potential gains and losses to the security`s value. Bond coupons and dividends can be either distributed to fund investors or simply reinvested into the income fund, into other income producing securities.

RELATED TERMS
  1. Income

    Income is money that an individual or business receives on a ...
  2. Current Income

    Current income is associated with strategies that seek to identify ...
  3. Net Investment Income (NII)

    Net investment income is income received from investment assets ...
  4. Fixed Income

    Fixed income is a type of investment in which real return rates ...
  5. Business Income

    Business income is a type of earned income, and is classified ...
  6. Factor Income

    Factor income represents the flow of income that is derived from ...
Related Articles
  1. Investing

    Meet Your Investment Objectives With Income Funds

    Discover the categories of income funds and the types of investors for whom they are appropriate.
  2. 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.
  3. 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.
  4. Financial Advisor

    Best Income Investing Strategies for Retirees

    The past few years have been tough for retirees seeking income from their investments. Here are some of the best strategies that can help.
  5. Investing

    Bond Funds Boost Income, Reduce Risk

    Bond funds can provide stable returns for those who depend on their investment income.
  6. Financial Advisor

    Income tax on mutual funds: The basics

    Learn about the basics of income tax on mutual funds, including what types of income may be subject to the capital gains tax rate.
  7. 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.
  8. Investing

    How Tax-Efficient Is Your Mutual Fund?

    Learn about factors that influence the tax-efficiency of your mutual fund, how income from your investment is taxed and what to look for when choosing a fund.
  9. Investing

    Bond Portfolios Made Easy

    Bonds have typically been viewed as stocks' less-glamorous sidekick, but they deserve a little more respect from investors.
RELATED FAQS
  1. What is the difference between gross income and earned income?

    The difference between earned income and gross income is an important one come tax time. Find out how the IRS uses both to ... Read Answer >>
Hot Definitions
  1. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  2. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  3. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  4. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  5. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  6. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
Trading Center