Where investors can find reliable income as U.S. assets see selling pressure
Investors looking for reliable income amid the market carnage have several places to turn, according to experts. Investors fled U.S. assets Tuesday amid concerns over President Donald Trump ‘s threats over Greenland and fears of a trade war. Stocks fell, while Treasury yields jumped . A sell-off in Japan’s bond market also weighed on Treasurys. “While the sell-off had been partially underway last week, as solid economic data had pushed the Dec. 2026 fed fund rate close to 3.2%, geopolitical uncertainty heightened over the weekend as well as Japanese fiscal [policy] pushed Japan 40-year rate through 4% to the highest since 2007,” said Leslie Falconio, head of taxable fixed income strategy in UBS Americas’ chief investment officer. “The jump in 30- and 40-year yields of more than 25 basis points was the most since the aftermath of Liberation Day tariffs announcements in April last year,” she said. US10Y 1Y mountain U.S. 10-year Treasury yield’s one-year performance On Saturday, Trump said that eight NATO members will face higher tariffs until a deal is reached for the United States to buy Greenland . On Tuesday, he threatened to slap France with 200% levies on its wines and champagne after French President Emmanuel Macron reportedly didn’t want to join Trump’s “Board of Peace” on Gaza. While geopolitical uncertainty is weighing on investors, corporate earnings have been good and expectations for the quarter remain high, said Kevin Simpson, founder and chief investment officer of Capital Wealth Planning in Naples, Florida. “But when you’re priced to perfection, anytime you get something that’s just a little bit disconcerting or a little bit concerning, it weighs on markets and that’s what we’re seeing today,” he said. There are several places investors can find income in this environment. High-quality bonds Bonds have returned to their traditional role as a portfolio ballast, since they have had a more negative correlation to stocks — meaning they move in opposite directions. That’s why certified financial planner Sam Huszczo, founder of SGH Wealth Management in Lathrup Village, Michigan, likes investment-grade corporate bonds. He prefers building a bond ladder, which means bonds of varying maturities, of up to 10 years. He locked in rates close to 5.5% about two years ago and has seen those bonds appreciate in price. “I don’t think it’s too late for investors,” said Huszczo, who thinks bonds could still possibly see double-digit price appreciation. “Profit margins are at all-time highs in the U.S. Companies have relatively good balance sheets at the moment,” he added. “The spread of corporates over Treasurys is worth the minor amount of risk that you’re taking by not getting into Treasurys.” Meanwhile, Wells Fargo is sticking with its fixed-income guidance amid Tuesday’s market action. The firm favors investment-grade bonds with maturities of three to seven years, which have yields close to the 10-year Treasury but with much less duration risk. “Our conviction remains that political headwinds are very unlikely to change the positive fundamental trends already in place,” Paul Christopher, Wells Fargo Investment Institute’s head of global investment strategy, said in a note Tuesday. “We believe the global economy is set to grow faster in 2026, especially in the U.S.” Stay diversified UBS believes diversification throughout fixed income is “essential” for income investors right now. Falconio is currently leaning towards high-quality, like investment-grade corporates and securitized products. It’s also important to have exposure to some sectors that have a higher correlation to the equity market, like corporate credit, and some that aren’t as correlated, like agency mortgage-backed securities. “Keeping that diversification allows you to still earn that income, compounding income, which we believe is a driver, but also to not have too much concentration risk within your portfolio,” Falconio said in a recent interview with CNBC. She expects Treasurys to be largely range-bound this year but will buy when prices dip and lighten up when yields go down. Dividend stocks Dividend-paying stocks are another way to earn income all year long, but they are also particularly attractive in this environment, said Capital Wealth Planning’s Simpson. He focuses on equities that grow their payouts because of increased earnings. “Markets are still very close to all-time highs, so it’s not like you’re missing the boat by de-risking a little bit,” Simpson said. “In fact, after such a strong run since October of 2022, it probably makes sense to think about that.” NOBL 1Y mountain ProShares S & P 500 Dividend Aristocrats ETF one-year performance Reliable income is also about consistency, he said. “In volatile markets, investors can remain comfortable through those ups and downs,” he added. “For us, it’s always about trying to make sure we’re getting paid while we wait.” Adding in options Simpson also adds in options during times of volatility, particularly covered calls. That entails selling call options on select stocks he owns at higher strike prices. It allows Simpson to collect the options premium from the sale to generate income. However, he gives up some upside if the shares are called away when the stock rises to that higher level. “You’re not worrying about the markets directionally, you’re monetizing that volatility,” he explained. “It certainly doesn’t eliminate risk by any means, but it helps to smooth out the rides when you have a range bound or choppy market.” There’s always cash Those who want to keep extra liquidity on hand can still find solid returns on cash equivalent assets, like money market funds and certificates of deposit , although those rates are not as high as they once were. However, the assets may not keep up with inflation. The annual average health-care inflation alone is projected to be 2.5% between 2026 and 2033, Wells Fargo’s Christopher said. Short-term rates found in money markets and CDs “may not stretch to cover inflation in other necessities,” he said. The annualized seven-day yield on the Crane 100 list of the 100 largest taxable money funds was 3.51%, as of Monday. The rate has been ticking down alongside Federal Reserve interest rate cuts. Investors can lock in cash yields by investing in CDs. Marcus by Goldman Sachs and Sallie Mae both offer 4% annual percentage yields on 12-month CDs, as of Tuesday. Still, investors will face a penalty if they need the money before the CD matures. However, a CD ladder, which is CDs of varying maturities, can help provide income at different times.
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