Income Investing

Income investing prioritizes generating regular cash flow from a portfolio, through dividends, bond interest, or other distributions, over pursuing capital appreciation. It is common among retirees and others who need a portfolio to fund ongoing expenses rather than simply grow over decades.

The most common trap is chasing yield: a stock or fund with an unusually high payout relative to its peers is sometimes signaling distress rather than opportunity, since a falling share price mechanically raises the yield percentage even as the underlying dividend becomes less safe.