Income oriented investors have been traveling through a yield desert over the last several years. Thanks to extraordinary monetary policy from the U.S. Federal Reserve that has included keeping interest rates pinned at zero percent for the last five years, those living on fixed incomes including retirees have been forced out of the safety of FDIC insured saving deposits and into various higher risk investment vehicles in an effort to find yield. Recognizing the voracious appetite for income in the yield-starved environment, some institutions and individuals have poured into these same higher income areas of the stock market, some with the use of leverage, to not only capture but also amplify yields. While the reliance on higher risk investments has helped satisfy the demand for yield to this point, it is reasonable to consider whether unforeseen risks and unintended consequences are being fostered in the process.
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