How to Find Income in a Yield Starved World


While I don’t physically travel around to conferences right now because of COVID restrictions, that doesn’t mean I’ve paused for one second on talking to smart people about the markets and investing.

And regardless of where I am meeting people or who I talk to these days, it’s all the same…

The major concern among investors is income

With rates being held down by the Fed, it’s very hard to make any meaningful return in traditional investments.

Even with the pullback in Treasury Bond prices, yields on the 10-year still aren’t at 2% yet.

Long-term corporate bond yields are a little over 3%…

Junk Bonds are yielding about 4%…

Bonds rated CCC, which is the same as barely breathing, pay a little over 6%.

Variable annuities make big promises but they almost always come with a high fee, or high commission pieces of garbage.

Simply, there just aren’t a lot of good choices for those looking for safe income plays. 

In Search of Yield

Earlier this month I had a chance to talk to a fund manager who is helping investors in search of yield.

Jay Hatfield, a 30-year veteran of the investment business, is the Founder, CEO and Portfolio Manager of  Infrastructure Capital Advisors (InfraCap). 

In addition to managing the ETFs, Mr. Hatfield is a General Partner at NGL Energy Partners, LP (NGL), an MLP he helped put together through a series of acquisitions. During his career he has been an  investment banker, a research director and portfolio manager. Throughout most of his career he has focused on real estate and other hard asset investments.

Infrastructure Capital Advisors looks for opportunities in energy, real estate, transportation, industrials and utilities. Like many of the investors I talk to, their primary concern is high income levels, so they are often looking at the credit and preferred stock offering of companies in these industries. 

I originally got on the phone with InfraCap to discuss one of their funds, but after our chat I thought I should mention a few of their funds for my income searching readers. 

InfraCap REIT Preferred ETF (PFFR)

The first ETF I want to talk about is their REIT Preferred stock fund. The InfraCap REIT Preferred ETF (PFFR) is the only ETF that is invested exclusively in REIT Preferred stocks.

The economy is continuing to recover but there are still a lot of REIT Preferred stocks trading below their Par, or Redemption Value. In addition to the 6.18% yield this ETF offers, there is still some upside left as these REITs reach par value, or even trade above that number.

The fund should also be a great tool to take advantage of any future disruptions in the real estate and REIT markets that might occur.

Virtus InfraCap US Preferred Stock ETF (PFFA)

Virtus InfraCap U.S. Preferred Stock ETF (PFFA) invests in preferred stock issued by US companies with market capitalizations of over $100 million.

This ETF is not an index fund, so Mr. Hatfield can show off his portfolio management skills with the portfolio.

He has done exactly that, with spectacular returns of more than 100% over the past year as the economy and the markets improved.

And the strong performance has continued this year even as rates have begun to rise.

Mr. Hatfield is intensely focused on credit. Although markets have improved, there are still more than a few companies out there that will see improvement and credit upgrades that lift the price of their preferred stocks.

The fund also uses small amounts of leveraging and option techniques to enhance income levels and total return potential.

We won’t see triple-digit performance from this ETF unless we have another crash, but we can collect a much higher-than-average yield and have the potential for add-on capital appreciation.

At the current price, the fund is yielding over 8% which is incredibly attractive in the low-rate world we live in currently.

This fund will fit nicely into just about any income portfolio.

No Days Off

The one thing that really stood out for me from my talk with Jay Hatfield was his passion for income-oriented investing.

We talked on a market holiday yet he was in his Manhattan office doing research for the funds he manages. He clearly loves what he does and judging him by his track record he is damn good at it.

If you need income, these are two ETFs that can help you achieve your goals.