Income-Focused Model Portfolio: A Blend of BDCs, MLPs, CEFs, Option Income Funds, and REITs for Retirement or Immediate Income Withdrawal.

This article presents a model portfolio for investors seeking income. The portfolio includes a mix of BDCs, MLPs, CEFs, Option Income funds, and REITs. The strategy is designed for investors looking to build a retirement portfolio or withdraw income immediately. The portfolio is based on the author's current investment ideas and is intended to provide a stable source of income.

Investors seeking a stable source of income for retirement or immediate withdrawals can benefit from a diversified model portfolio. This portfolio, designed by an experienced investor, incorporates a mix of Business Development Companies (BDCs), Master Limited Partnerships (MLPs), Closed End Funds (CEFs), Option Income funds, and Real Estate Investment Trusts (REITs). The strategy aims to provide a consistent monthly income flow, adjusted for inflation, and is based on the author's current investment ideas.

The portfolio includes 25 securities, each with a 4% weighting to ensure diversification and mitigate idiosyncratic risk. The investments are chosen for their top-tier investment companies, sophisticated research, and proven track record. The portfolio is further divided into categories such as REITs, BDCs, bond funds, MLPs, dividend income funds, and derivative or option income funds.

Business Development Companies (BDCs)

- Ares Capital Corp. (ARCC): A leading BDC with a quarterly dividend yielding 9.76% and a 10-year total return of 229%.
- FIDUS Investment (FDUS): A unique BDC with a 11.35% yield and a 10-year total return of 315%.
- Kayne Anderson BDC, Inc. (KBDC): A first lien BDC with a 11.79% yield and a relatively new, less leveraged balance sheet.

Bond Funds

- Ares Dynamic Credit Allocation Fund, Inc. (ARDC): A fund that holds a combination of loans, bonds, and collateralized loan obligations, with a monthly dividend yielding 9.81%.
- PIMCO Dynamic Income Opportunities Fund (PDO): A fund with a monthly distribution yielding 10.82% and a 5-year total return of 72%.
- PIMCO Income Strategy Fund II (PFN): A fund with a monthly distribution yielding 11.28% and a focus on corporate bonds.
- Cohen & Steers Tax-Advantaged Preferred Securities and Income (PTA): A fund with an annual distribution yield of 7.84% and a current trading discount of -3.48% to NAV.
- Western Asset Diversified Income Fund (WDI): A closed-end fund focused on income from fixed income securities, with an annual yield of 11.9% and monthly distributions.

Master Limited Partnerships (MLPs)

- Enterprise Products Partners L.P. Common Units (EPD): An MLP with a 6.89% distribution yield and a 5-year price increase of +84%.
- MPLX LP Common Units (MPLX): An MLP with a 7.83% distribution yield and a 5-year price increase of +179%.
- FT Energy Income Partners Enhanced Income ETF (EIPI): An actively managed fund that invests in energy companies and earns premium income from writing covered calls, with a trailing 12-month yield of 8.7%.

Dividend Income Funds

- BlackRock Health Sciences Trust (BME): A fund invested in large healthcare stocks, with a 8.28% yield and a -8.26% discount to NAV.
- Eaton Vance Tax-Advantaged Dividend Income Fund (EVT): A fund with an 8.0% annual dividend yield and a -7.63% discount to NAV.
- Eaton Vance Tax-Advantaged Global Dividend Opportunities Fund (ETO): A fund with a 7.42% forward yield and a -8.69% discount to NAV.

The model portfolio offers a mix of monthly and quarterly distributions, providing a stable income flow for investors. The strategy focuses on proven investments with a history of consistent performance and growth. The portfolio is designed to be easily tradable and is based on the author's current investment ideas.

References

Model Portfolio For Income, October 2025^[1] https://seekingalpha.com/article/4828979-model-portfolio-for-income-october-2025