Knowledge Base

What is income diversification?

Each dividend payer in your portfolio contributes to your income as a whole. Higher yielding stocks or larger holdings will make up a larger percentage of your total. Investors rarely look at the diversification of their income and how would be impacted if certain companies changed their dividend policy.  For someone truly living off this income, it is an important consideration.  One or two high yielding securities could make up a bulk of your income.  A cut in their payments could have a devastating impact.