Sunday, August 18, 2013

What investment vehicle typically yields the highest percentage income?

Q. Not necessarily the highest overall RETURNS, but the highest cash flow as compared to the price of the investment.

Ex. Real estate rent, dividends from dividend-paying stocks, interest from bonds, etc.
No I'm not talking about P/E Ratio...I am talking about cash flow returns.

Growth stocks would definitely not be the answer because they do not pay dividends. Hence zero cash flow returns.

A. This may not be correct, but I suspect the answer is junk bonds. Junk bonds tend to have a very high yield. The catch is that some of them default, as a result on average you will have negative capital gains on a portfolio of junk bonds, but they have a great yield.




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