Income investors have been on a bumpy ride since mid-2024. Since then, the Federal Reserve has cut interest rates six times, including a 25-basis point cut at the Dec. 10, 2025 meeting.
In turn, debt securities have become less popular, with shorter-dated Treasury bills quickly approaching 3.5% and the best yields for certificates of deposit remaining above 4%, though drifting downward.
That confirmed what many expected once the Fed began cutting in September 2024—lower fixed-income rates would push income investors to find replacement yield.
The practical takeaway: yield-focused investors need a playbook that blends cash flow, risk control, and tax awareness. Here are three income options that can help.
Option #1: Covered Call ETFs
A favorite among yield-focused investors, covered call exchange-traded funds (ETFs) generate income by selling call options on the stocks held in their portfolios. The result is typically higher dividend yields, which are bolstered by the option premiums.
Covered call ETFs tend to trade in well-defined ranges, meaning they sacrifice share appreciation for a combination of relative safety and higher-than-usual dividend yields.
Typically, these funds are actively managed, which can translate to higher expense ratios. But those fees can easily be offset by eye-catching payouts.
The JPMorgan Equity Premium Income ETF (NYSEARCA: JEPI), the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ), and the NEOS S&P 500 High Income ETF (BATS: SPYI) serve as three prime examples.
Those three currently pay dividends that will have any income investor forgetting about Treasury notes or corporate bonds. JEPI’s dividend currently yields 8.07%, or $4.68 per share annually. With the brief exception of April’s tariff tantrum, shares have been range-bound between $55.10 and $59.71.
Meanwhile, JEPQ and SPYI pay dividends that currently yield 10.11% and 11.6%, respectively. Icing the cake, each of those three ETFs pays a monthly dividend, meaning shareholders have access to their yield on a more frequent cadence.
Option #2: Data Center and Digital Infrastructure REITs
Real estate investment trusts (REITs) famously must distribute 90% of their taxable income to shareholders in the form of dividends in order to maintain their preferred tax status. Being able to avoid those corporate taxes enables them to pay dividends that, according to Multi-Housing News, averaged 3.88% last year.
While that yield pales in comparison to covered call ETFs, it remains competitive with current rates for fixed income products. Plus, REITs are unmatched in their ability to simultaneously provide strong yields and share appreciation.
That is particularly notable in corners of the real estate market that are enjoying ancillary success due to the AI trade as well as increasing infrastructure demands.
Digital Realty Trust (NYSE: DLR), for instance, owns, acquires and operates carrier-neutral data centers and provides related colocation and interconnection solutions. The REIT is down more than 12% year-to-date, but since the market’s bottom in April, DLR is up nearly 14% while paying a dividend that currently yields 3.15%, or $4.88 per share annually.
Alternatively, the Global X Data Center & Digital Infrastructure ETF (NASDAQ: DTCR) is an ETF that tracks a market-cap-weighted index of global equities involved in data center REITs and related digital infrastructure companies.
In 2025, the fund has gained more than 27% while paying a dividend that currently yields 1.28%, or 27 cents per share annually.
Option #3: Tax Pass-Through Entities Like MLPs and BDCs
Similar to REITs, master limited partnerships (MLPs) and business development companies (BDCs) take advantage of structures that permit them to pass on taxes to shareholders. Because of that tax treatment, they tend to pay dividends with better-than-average yields.
The energy sector includes many MLPs, specifically in the midstream segment. One example—Plains All American Pipeline (NYSE: PAA)—specializes in the transportation, storage and marketing of crude oil, natural gas liquids, and refined products.
Shareholders of PAA enjoy a dividend that currently yields 8.61%, and the company has increased its payout for five consecutive years.
Whereas many MLPs operate in the energy sector, most BDCs operate in the financials sector. They’re also a good way for everyday investors to gain access to private credit markets, as they act similarly to private equity funds by providing capital to small- and mid-sized U.S. companies that struggle to get financing.
SLR Investment (NASDAQ: SLRC), for example, currently pays a dividend yielding 10.62%, or $1.64 per share annually, offsetting concerns about its nearly -5% underperformance this year.
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The article "Rates Are Falling: Here Are 3 Income Plays for 2026" first appeared on MarketBeat.
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