If you’re aiming for steady cash flow and a bit of financial peace of mind, income funds might be your best bet for 2024. These funds are designed to reward investors with consistent cash distributions, hence offering them a reliable source of income.
While they might not soar like growth stocks in a bull market, their strength lies in stability and resilience, especially during tougher times.
So, if you’re looking to cover everyday expenses or inch closer to your retirement goals, checking out the top income funds to buy now could be a smart move.
What Are Income Funds?
Before we show you the top income funds to buy now, let’s quickly see what income funds are in the first place. So, what are income funds?
In simple terms, they’re investment funds that focus on generating regular income for investors, usually through a mix of high-dividend stocks and bonds. These funds often include reliable blue-chip companies known for their stability, making them a safer bet compared to high-growth stocks.
By investing in income funds, you’re tapping into a steady cash flow, which can be especially appealing during uncertain market times. So, whether you’re looking to diversify your portfolio or simply want a dependable income stream, income funds offer a solid and relatively low-risk option.
Why Are Income Funds Desirable?
While income funds might not offer the highest returns, they are popular among investors because they provide steady cash flow and a way to diversify your portfolio.
For those nearing retirement, the regular income can help cover living expenses. But even if retirement is still a distant goal, reinvesting dividends into more shares can help you build a larger nest egg over time.
The more shares you accumulate, the more income you generate, giving you more financial flexibility down the road. It’s this combination of stability and growth potential that makes income funds a valuable addition to many investment strategies.
Top Income Funds to Buy Now – The Best 4
So, you’ve made the smart decision to invest in income funds, the next question is — what are the best income funds worth your money now? We’ve streamlined the options for you here.
#1: First Trust Morningstar Dividend Leaders Index ETF (FDL)
If you’re looking for a fund that offers both stability and growth, the First Trust Morningstar Dividend Leaders Index ETF (FDL) might be a solid choice. With $4.2 billion in assets and a 4.2% 30-day SEC yield, FDL is a strong contender for income-focused investors.
Its top holdings include heavyweights like AbbVie Inc. (ABBV), Verizon Communications Inc. (VZ), and Chevron Corp. (CVX). The fund is well-diversified across key sectors like healthcare, financial services, and consumer staples, making it a balanced choice with an 11.3% annualized return over the past three years.
#2: JPMorgan Equity Premium Income ETF (JEPI)
There is a reason JPMorgan Equity Premium Income ETF (JEPI) made our list of ‘The top income funds to buy now.’ It is a powerhouse when it comes to generating income. With a 6.4% 30-day SEC yield and an even higher trailing-12-month yield of 7.2%, this fund is all about maximizing cash flow.
What sets JEPI apart is its strategy of selling out-of-the-money call options, which provides investors with monthly distributions. Managing $35 billion across 139 holdings, JEPI’s portfolio includes companies like Progressive Corp. (PGR), Trane Technologies PLC (TT), and Meta Platforms Inc. (META).
Its focus on sectors like information technology, healthcare, and industrials gives it a diverse edge. With an annualized return of 7% over the past three years, JEPI offers a strong combination of income generation and growth potential.
#3: Invesco High Yield Equity Dividend Achievers ETF (PEY)
For those seeking high yields and consistent performance, PEY is a standout. This fund focuses on dividend-paying stocks, with 90% of its assets allocated to companies known for rewarding their shareholders.
With a trailing-12-month yield of 4.7% and an annualized return of 9.8% over the past decade, PEY has proven itself as a dependable income generator. The fund’s top holdings include Altria Group, First Interstate BancSystem Inc. (FIBK), and Cogent Communications Holdings Inc. (CCOI), with a strong emphasis on small and mid-cap stocks. This mix allows PEY to tap into the growth potential of smaller companies while still providing a steady income stream.
#4. iShares Select Dividend ETF (DVY)
The iShares Select Dividend ETF (DVY) is perfect for investors who prioritize stability and consistent income. This fund targets high-yield dividend stocks that have a proven track record of paying out to shareholders.
With 98 equity holdings, including Altria Group Inc. (MO), Philip Morris International Inc. (PM), and AT&T Inc. (T), DVY ensures that no single stock overly influences its performance. The fund’s 30-day SEC yield stands at 3.8%, and it has $19.8 billion in assets under management.
Focusing on sectors like utilities, financials, and consumer staples, DVY has achieved an annualized total return of 10.4% over the past five years, with a year-to-date gain of 15.2%. This makes it an excellent choice for those looking to secure a reliable income while also benefiting from market gains.
Final Notes on the Top Income Funds to Buy Now
Without any debate, income funds offer a reliable way to generate steady cash flow and diversify your investment portfolio. So, why not take advantage of the top income funds we have shared in this post to tap into the benefits these funds provide?
This is a good opportunity to strengthen your financial future. Start investing in income funds today!