Feb 28, 1999. For the income investors, it has not been an easy time, especially when you have 5.3 % yield on the long term Treasury. The Standard & Poor's 500 index puny average yield of 1.3 % is no windfall either. So what does the income investor or retiree do? Well there are several items they can look at, and it may not be a bad idea right now the way the market is going.

One income producing alternative is the real estate investment trust (REITs), but this entails a significant measure of additional risk. With shares down more than 25 %, on average, in the past year, REITs have never been so cheap relative to stocks and bonds. On the average, REITs are one and a half times the yield of 10 year Treasury notes. Keep in mind that although REITs are cheap, it doesn't mean they can't go down if there is a recession. This would have a very negative impact for the industry, which could last for a couple of years or longer. But I doubt it.

If the income investor wants something a little safer, then a good place to look is Utilities. Many Utilities now have years of heavy capital spending behind them and can use free cash flow to pay off debt, buy back stocks, and perhaps increase dividends.

Another area is the high yield bond fund. My favorite is Fidelity Spartan High Income Fund (SPHIX), with a 5 year total return of 10.83%. It ranked #1 out of 88 high yield bond funds in the past five years.

George