Midstream energy partnerships and preferred stocks offer 7% yields, meeting retirement income targets the S&P 500 cannot match.
A $475,000 portfolio targeting $33,600 in annual income requires a 7% yield, far above the S&P 500’s sub-2% average. Traditional index funds fall short without selling shares, pushing investors toward higher-yielding alternatives.
Midstream energy partnerships and preferred stocks provide the necessary yields but face investor skepticism due to tax complexity and perceived limited upside. These sectors underperformed during the 2020-2024 equity rally, deterring broader adoption despite their income potential.
A 50/50 allocation across these sectors can generate $38,000 annually, exceeding the $33,600 target. However, distribution volatility and tax reporting challenges remain key considerations for retirees.