What Are Some High-Yield Investments?


Quick Answer

Common types of high-yield investments include high-yield bond funds, high-yield stocks and stock funds, real estate investment trusts and peer-to-peer lending sites, according to U.S. News & World Report. These investments offer the potential for more income than investors would earn on bank deposits or U.S. Treasury bonds but also carry greater risk.

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What Are Some High-Yield Investments?
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Full Answer

High-yield bond funds, also known as junk bond funds, buy corporate bonds issued by companies with fair to poor credit ratings, explains Zacks Equity Research. These funds may also invest in debt securities and bank loans. Investors decrease their risk by buying shares of a fund rather than individual bonds because if one bond issuer goes out of business, the fund still owns many other bonds that make profits.

High-yield stocks typically pay a dividend of at least 5 percent, according to Investopedia, which far exceeds the S&P 500's average yield of 2 to 3 percent. High-yield companies tend to operate in established industries such as utilities. Companies can cut their dividend payouts, so the key to choosing a good high-yield stock is finding one with a stable or increasing dividend.

Real estate investment trusts are companies that own income-producing real estate property, explains Investopedia. Besides offering a simple and liquid way to invest in real estate, these companies are required by law to pay at least 90 percent of their profits as dividends. Companies in this sector typically offer high-dividend yields because of that requirement.

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