Retired Passive Income Investors: Consider BIP, GOLD and ALTY

Retirees seeking a bit more passive income should consider the broader range of options out there. Indeed, a mix of dividend-paying equities, real estate investment trusts (REITs), and fixed-income securities may be some of the most popular income-producing assets. However, they’re not the only ones. In this piece, we’ll check in with just a few plays that retired investors can play alternative investments.

Indeed, alternative investments (think infrastructure, real estate, renewable power-generating assets, and private equity) can provide your portfolio with added diversification, some extra income, and a lower degree of market risk (think lower betas).

Though there are other non-income-producing alternative assets out there worth stashing away for the long haul, such as precious metals, collectibles, cryptocurrencies, and even art, such assets don’t produce cash flows, making them less appealing options for retired investors seeking an income supplement.

Without further ado, here are a handful of ways retired investors can seek to inject their portfolios with the power of alternative assets.

Key Points About This Article

• Alternative assets deserve a spot in retired income investors’ portfolios.
• There’s more than one way to jolt your income stream with alternative assets.
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Global X Alternative Income ETF

Global X Alternative Income ETF (NASDAQ:ALTY) makes it all too easy for retail investors to expose themselves to a broad range of alternative assets. The exchange-traded fund (ETF) pays distributions monthly and is designed to pursue higher-yielding alternative options while also balancing risks. Indeed, the fund’s high-income potential is one of the selling points of ALTY shares.

With a massive 7.16% distribution yield, ALTY stands out as a hidden gem for retirees who want a source of passive income outside of the wild world of equities. The total expense ratio stands at 0.5%, which is quite fair in my mind, given the broad range of assets you’ll gain exposure to from one single security.

The ETF is well-diversified across numerous asset classes, ranging from real estate to infrastructure and even encompassing preferred shares, emerging market bonds (which tend to have higher yields due to the added risk relative to developed markets), and covered calls (an options-writing strategy that trades off share price upside for premium income).

Though the yield is generous, shares have been a rather rocky ride since the COVID pandemic began back in 2020. But if you’re a retiree, capital gains potential matters way less than the upfront yield. I think the trade-off is a worthwhile one to make.

Brookfield Infrastructure L.P.

Infrastructure assets (think toll roads, terminals, ports, rails and all the sort) are a pretty steady source of cash flow for retired investors seeking to level up their diversification. Additionally, when recession strikes, cash flows generated from such critical infrastructure assets tend to be profoundly resilient.

Even when a recession or, goodness forbid, a depression hits, such assets are still needed in a functional economy. Given this, I’d argue that Brookfield Infrastructure L.P. (NYSE:BIP | BIP Price Prediction) is one of the most underrated income-producing alternative asset plays out there.

Shares of the name yield 4.8% at writing. With a steady track record of increasing its distribution and a plethora of long-life alternative assets focused on utilities, pipelines, data infrastructure, and transportation, retirees can sleep comfortably at night collecting that steady quarterly distribution.

Barrick Gold Stock

As mentioned previously, precious metals like gold do not produce cash flows. That’s a major reason why Warren Buffett isn’t a massive fan of the pretty yellow metal. Though metals themselves don’t cut you a cheque, some of their miners do pay pretty handsome dividends every quarter.

Barrick Gold (NYSE:GOLD) is one of the most generous dividend-paying gold miners on the market. The stock yields just shy of 2% at the time of writing. As the gold rally continues (gold is flirting with $2,700 per ounce), one has to think a nice dividend hike is waiting right around the corner.

Either way, Barrick envisions growing its gold production by a whopping 30% by the end of this decade. If it can pull off the feat while gold continues roaring on the back of lower interest rates, ABX stock seems like a bargain destined for new highs.