Model Portfolio for Income Seeking Investors: BDCs, MLPs, CEFs, and REITs

This article presents a model portfolio for investors seeking income, using a combination of BDCs, MLPs, CEFs, and REITs to generate an annual income. The portfolio is designed for investors building a retirement portfolio or withdrawing income immediately. The investment thesis aims to provide a diversified income stream through a selection of high-yielding securities.

Investors seeking income, whether for retirement or immediate withdrawal, can benefit from a diversified portfolio designed to generate a consistent and growing income stream. This article presents a model portfolio that combines Business Development Companies (BDCs), Master Limited Partnerships (MLPs), Closed-End Funds (CEFs), and Real Estate Investment Trusts (REITs) to achieve this goal.

The portfolio is structured to provide a mix of monthly and quarterly distributions, ensuring a steady income flow that can be withdrawn monthly and adjusted for inflation. Each security is selected based on its proven track record, high-yield potential, and liquidity, with a focus on income as the primary objective.

Key Components of the Model Portfolio

Business Development Companies (BDCs)

1. Ares Capital Corp. (ARCC)
- Yield: 8.6% quarterly
- 5-Year Total Return: 265%
- Frequency: Quarterly
- Rationale: Widely regarded as one of the best and most conservative BDCs, ARCC offers a lower risk, high-yield option.

2. FIDUS Investment (FDUS)
- Yield: 10.6% quarterly
- 5-Year Total Return: 251%
- Frequency: Quarterly
- Rationale: FIDUS occupies a unique position of leadership within BDCs, offering a high yield with a strong track record.

3. Kayne Anderson BDC, Inc. (KBDC)
- Yield: 10.6% quarterly
- 5-Year Total Return: Not specified
- Frequency: Quarterly
- Rationale: KBDC is a relatively new first lien BDC with a low-leverage balance sheet, providing a stable and high-yield option.

Bond Funds

1. Ares Dynamic Credit Allocation Fund, Inc. (ARDC)
- Yield: 9.3% monthly
- 5-Year Total Return: 82%
- Frequency: Monthly
- Rationale: Ares is a leading alternative asset management company, offering a high-yield, stable monthly distribution.

2. PIMCO Dynamic Income Opportunities Fund (PDO)
- Yield: 11.3% monthly
- 5-Year Total Return: Not specified
- Frequency: Monthly
- Rationale: PDO offers a dynamic asset allocation strategy, providing a high yield with a focus on current income.

3. PIMCO Income Strategy Fund II (PFN)
- Yield: 11.5% monthly
- 5-Year Total Return: Not specified
- Frequency: Monthly
- Rationale: PFN focuses on corporate bonds, offering further diversification and a high-yield, monthly distribution.

Master Limited Partnerships (MLPs)

1. Enterprise Products Partners L.P. Common Units (EPD)
- Yield: 7.0% distribution
- 5-Year Total Return: +66%
- Frequency: Quarterly
- Rationale: EPD offers a high-yield, growing distribution with a proven track record.

2. MPLX LP Common Units (MPLX)
- Yield: 7.6% distribution
- 5-Year Total Return: +155%
- Frequency: Quarterly
- Rationale: MPLX provides a high-yield, growing distribution with strong analyst support.

3. FT Energy Income Partners Enhanced Income ETF (EIPI)
- Yield: 8.79% monthly
- Frequency: Monthly
- Rationale: EIPI offers a high-yield, actively managed fund that invests in energy companies, providing a monthly distribution with the potential for special dividends.

Dividend Income Funds

1. Eaton Vance Tax-Advantaged Dividend Income Fund (EVT)
- Yield: 8.3% annual
- 5-Year Total Return: +160%
- Frequency: Monthly
- Rationale: EVT offers a high-yield, monthly distribution with a focus on U.S. domestic equities.

2. Eaton Vance Tax-Advantaged Global Dividend Income Fund (ETG)
- Yield: 7.5% annual
- Frequency: Monthly
- Rationale: ETG provides a global exposure with a high-yield, monthly distribution.

Conclusion

This model portfolio is designed to provide a diversified income stream through a selection of high-yielding securities. By combining BDCs, MLPs, CEFs, and REITs, investors can achieve a consistent and growing income flow, whether for retirement or immediate withdrawal. Each security is chosen based on its proven track record, high-yield potential, and liquidity, ensuring a stable and reliable income source.

References
[1] https://seekingalpha.com/article/4813220-model-portfolio-for-income-august-2025