Income Ideas for Your Portfolio
22 April 2024

There is a common belief that income investing is only relevant to retirees or those nearing retirement age. However, this overlooks the pivotal role of income as a powerful driver of total returns in an investment portfolio. 

Income investments offer a dual advantage of stability and growth potential, making them an attractive option even for investors accustomed to the safety of cash. By diverting a portion of your cash holdings into income-generating assets, you not only safeguard your capital against inflation but also unlock the power of compounding. 

While cash sits idle, income-generating assets such as investment grade bonds, dividend stocks, and infrastructure assets work to generate regular income streams. This income can then be reinvested, compounding your returns over time and fuelling your portfolio's growth potential. 

Moreover, income investments contribute to building a more defensive portfolio by mitigating overall volatility and smoothening returns. This becomes particularly crucial during market downturns, where a reliable income stream can act as a financial cushion. 

In the current market landscape where interest rates remain high, investors find themselves in prime position to lock-in attractive yields, with access to a plethora of asset classes that provide opportunities for generating income. Here are some ideas that investors can consider for their portfolios in 2024 to boost their income potential.

Investment Grade Bonds
Investment grade bonds serve as a bedrock of stability within investment portfolios, particularly during periods of economic uncertainty or market volatility. These bonds are issued by companies with strong credit ratings, making them relatively low-risk investments compared to their higher-yield counterparts.

Investors in investment grade bonds receive regular interest payments, known as coupon payments, throughout the life of the bond. These payments provide a reliable income stream, while the principal investment is typically returned upon maturity, ensuring capital preservation.

By allocating a portion of their portfolio to investment grade bonds, investors can enhance overall portfolio stability and mitigate downside risk. Given their inverse correlation to equities, this asset class can act as a counterbalance, providing a cushion during turbulent market conditions.

High-Yield Bonds

High-yield bonds, also known as junk bonds, are issued by companies with lower credit ratings, offering higher yields to compensate for the increased risk of default. While high-yield bonds carry greater credit risk compared to investment-grade bonds, they can provide investors with a higher level of income. However, it's essential to carefully evaluate the credit quality of issuers and diversify across a range of bonds to mitigate default risk.

Dividend Stocks

Another common source of income generation is dividend investing. By focusing on companies with a history of consistent dividend payments, investors can build a portfolio that delivers regular income while benefiting from potential capital appreciation. Dividend-paying stocks often belong to established companies with strong balance sheets, making them a reliable source of income even during periods of market volatility. Furthermore, investors can enjoy equity upside especially when the underlying companies are able to consistently grow their business, providing outsized income potential over time.


Infrastructure represents another compelling income idea for investors seeking stable and reliable cash flows. These assets, such as toll roads, airports, and utilities, offer an additional source of diversification within investment portfolios. One of the key advantages of infrastructure investments is the long-term contractual nature of the assets, which ensures a steady income stream over time. 

Unlike other sectors, infrastructure assets tend to have predictable revenue streams that are less influenced by short-term market fluctuations or economic cycles. The income generated from these assets is often linked to the asset base of the companies rather than the business cycle, providing investors with a stable income stream over the long term.

Equities with Covered Call Options

Equities serve as the cornerstone of many investment portfolios, offering the potential for substantial capital appreciation. However, investors can further enhance the returns from their equity holdings by incorporating covered calls into their strategy. Covered calls involve selling call options on existing equity holdings, allowing investors to generate additional income through premium payments.

By selling call options, investors effectively agree to sell their shares at a predetermined price (the strike price) within a specified timeframe. In return, they receive an upfront payment (the premium) from the buyer of the call option. 

If investors expect the stock market to be increasingly volatile, they may sell a call option against a long stock position and use the premium earned to cover part of the market drop. As such, the income generated from covered calls can provide a buffer against losses, helping to stabilise overall portfolio returns.

Convertible Bonds
Convertible bonds offer investors a unique hybrid security that combines the income-generating qualities of fixed income with the growth potential of equities. These bonds come with a conversion option that allows investors to exchange the bond for a predetermined number of shares of the issuing company's stock. In short, it gives investors the best of both worlds: bond-like protection on the downside, equity-like gains on the upside. 

By holding convertible bonds, investors benefit from regular interest payments, providing a steady income stream. At the same time, they have the opportunity to participate in the potential upside of the underlying equity, should the company's stock price appreciate significantly. This dual nature of convertible bonds makes them an attractive option for investors seeking to diversify their income sources while maintaining exposure to potential capital growth.

Taking a Multi-Asset Approach to Income

A multi-asset approach to income investing allows investors to tap into various income streams while reducing overall portfolio volatility. By integrating diverse income-generating strategies into their portfolios, investors can create a well-rounded investment portfolio that is resilient across different market conditions.

This article has been prepared by AHAM Asset Management Berhad (“AHAM Capital”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to AHAM Capital and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of AHAM Capital.

The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, AHAM Capital makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions.

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