Income investing

An investment strategy in which investors look for companies paying strong dividends or interest payments as well as making capital gains. These pay a regular income stream but are taxed at normal income tax rates if they are held outside of an ISA. Investors usually focus on established companies with dividend yields of around 5% and who make regular dividend payments to compensate investors for their lower growth rates. These can be mixed with bonds with different maturity dates to provide diversified sources of income.

This definition is for general information purposes only