Top Dividend (Income) Strategies for 2025

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​Top Dividend (Income) Strategies for 2025
 
Everyone wants to earn income on their money, not just the explosive gains of crypto, gold and the Magnificent 7, but also dividends, which most of those assets don’t offer. But is “income” bait for investments that might lose our principal investment, particularly in a Debt World? What are paper losses? Does it all wash out in the end, since yields rise when share prices fall, or is that just another sales pitch?  
 
Here are the topics we’ll discuss in this blog.
 
The Rising Yield, Sinking Stock Myth
No Blind Faith
Keep the Terms Short
Never Reach for Yield
Keep the Creditworthiness High
Read the Fine Print
Underweight Bond Funds and Money Market Funds
Rolling Maturity Dates & FDIC Limits
 
And here is more color on each point.
 
The Rising Yield, Sinking Stock Myth
Broker/salesmen have many stock sales phrases. Clients can be sold into high-yield dividend stocks, such as commercial real estate, with the assurance that if the stock price sinks, yields rise, which is true – at least for a short period of time. However, the yield rarely makes up for the share price losses, and if the company is in real trouble, the dividend will get slashed, and the share price will plunge even further.
 
We saw this with General Electric in 2017-2018, with the banks in 2020, and more recently with many office building REITs. Incidentally, Warren Buffett dumped all of his GE stock just a few months before the company cut the dividend on Nov. 13, 2017. We had been warning that the higher the dividend, the higher the risk since 2012, using GE as the poster child for this market secret. (It was outlined in the 1st edition of The ABCs of Money, which was released in 2012.)
 
With over $101 trillion in total U.S. debt and loans, an unprecedented level, we live in a Debt World.

Sadly, we don’t know what is true (unless we’ve done our own due diligence prior) until we leap in and discover that the sea of gains we were promised is actually a mudhole of muck and losses. Recently, I was asked for a second opinion on a “conservatively” managed portfolio. The client was told that he was earning above 5% income. The statement showed that the ROI was barely 2%, when you factor in fees and paper losses. Some of the losses were in long-term junk debentures that were illiquid and didn’t have to be paid back until 2075! The minute the asset was purchased, the value sank, with no buyer on the other side of the table to offload the asset onto.
 
No Blind Faith
Long-term bonds lost more than stocks in 2022 and again in 2024. Conservative portfolios are not as safe as we’re being told. In short, we cannot have blind faith that someone else is protecting our future for us (even if we think that our broker is our friend). We must walk through our financial home to make sure it is sound and fix the leaks while the sun is still shining. I’ve outlined a few tips below to assist in this. It’s a better idea to do this before the headlines, while we still have a chance to protect our assets and wealth, capture gains and adopt a crisis-proof portfolio.

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So, what is a good strategy for income in 2025 and going forward?
 
Keep the Terms Short
Short-term Treasury bills and FDIC-insured Certificates of Deposit are paying close to the same yield as long-term, illiquid bonds, as you can see in the Treasury Bill chart below.  

The longer the period of time that someone has to pay us back, the more things that can go wrong. Thus, duration adds risk, particularly when over half of the S&P500 are at or near junk status, including a lot of banks and financial services corporations. 
 

Never Reach for Yield
If a 2-year FDIC-insured CD or U.S. Treasury Bill pays 4.3% and a 30-year only pays 4.7%, we just aren’t getting paid to take on the extra risk. (Will we even be alive 50 years from now, when the company or country has to pay us back?) I’ve seen high-yield bond and dividend funds that charge fees of 3-5%, taking the yield even lower than 2-year T bills, offering half the income that is advertised. High-yield means greater risk, and is often just called “junk.” So, again, why take on risk when you don’t have to?
 
In every marketplace, there are opportunities. The best buying bargains occur in recessions. However, if we have too many losses (paper losses are losses, too) or our money is tied up in long-term, illiquid obligations, then we can’t take advantage of lower prices. Most people don’t buy low because they can’t. Capital preservation and the ability to access our money are very important strategies for a Debt World.
 
Keep the Creditworthiness High
The U.S. is no longer a AAA rated country. Meanwhile, Australia is. Australian ETFs often pay double the yield of U.S. dividend funds — offering more income for less risk. This is one of the reasons why we are using value substitutes in our diversified sample pie charts. It pays to do a little due diligence and know the creditworthiness of the asset! 
 
While qualified banks are FDIC-insured, I’d still want to buy my Certificates of Deposit from a creditworthy bank rather than one that is almost a junk bond.
 
Read the Fine Print
Because there is so much debt in the world, and so many creative Wall Street executives trying to manage this, there are many new opportunities being offered to investors. Some of them have alarming terms. Blackstone’s private credit offering is opague, ties up our money, has high fees and would likely scare off anyone who reads the disclosures. Here are a just a few of the more troubling terms…

• You should not expect to be able to sell your shares regardless of how we perform.
• You should consider that you may not have access to the money you invest for an extended period of time.
• We do not intend to list our shares on any securities exchange, and we do not expect a secondary market in our shares to develop prior to any listing. 
  

I’ve seen a retiree who had blind faith in the broker that sold them into private placement REITs that promised a high yield, who lost $18,000 of their investment. This was more money than they really could afford to lose. Are we really getting paid to take on the extra risk of this particular investment? Is it as safe as the broker-salesman (who might be making tens of thousands of dollars on the sale) is telling us? How much yield above the lower-risk, short-term money is it really offering, particularly if we subtract the management fees and expenses? You can read D&T’s REIT Loss story in their own words in the blog below.
 
 
Underweight Bond Funds and Money Market Funds
Investment grade bond funds can have up to 20% in junk bonds. The yield of money market funds goes down when interest rates get cut. Funds are not FDIC-insured (because brokerages that offer them are not banks). Many bond funds have lost money – something that can wipe out any interest or income we’re receiving. Money market funds can get into trouble in recessions. Here are some of the concerns that the Federal Reserve outlined in the Monetary Policy Report that they submitted to Congress on Feb. 7, 2025. (MMFs are money market funds.)
 
Some open-end bond mutual funds remained vulnerable to significant withdrawals, as they are required to permit daily redemptions despite holding assets that can suffer losses and become illiquid under stress. While the 2023–24 SEC reforms on MMFs have mitigated some vulnerabilities associated with prime MMFs, structural vulnerabilities remained in certain other short-term investment vehicles. Moreover, assets in these alternative vehicles, including prime-like offshore MMFs, as well as stablecoins which are also vulnerable to runs, grew notably in the second half of 2024. Bond and loan funds remained susceptible to redemptions during periods of stress, with more severe pressures possible if assets become more illiquid or redemptions become unusually large. In addition, life insurers continued to rely on a higher-than-average share of nontraditional liabilities.
 
                          
Rolling Maturity Dates & FDIC Limits
Economists are terrible at forecasting recessions. They are almost always late in even admitting that the economy is in trouble. As you can see in the charts below, most of the stock losses occurred months before the headlines that the economy was in a recession. 
 

 
This is another case for shorter terms and rolling maturity dates. We want to be able to take advantage of opportunities when they arise, rather than having our money locked up in low-yielding, long-term, illiquid investments. Having a steady stream of money that keeps maturing allows us to take advantage of investment opportunities that might arise.
 
Be sure to observe the FDIC limits. Read the fine print. Having multiple CDs or Treasury bill lots helps us with the rolling maturity dates, and also the FDIC limits – particularly if our CDs are at several creditworthy banks. Only 5 banks collapsed in early 2023 – not the entire industry. While those banks were taken over, it’s important to remember that uninsured depositors are not always going to be protected. Silicon Valley Bank’s emergency umbrella for depositors who were above the FDIC-insurance limit was a special exception.
 
Bottom Line
Earning dividends and income is tricky in 2025 without losing principal. If we don’t ask the right questions, read the fine print and do a forensic examination of our brokerage statements, we might not be aware that the real return of our wealth plan could be half or less of what we believe that we are earning. We might have debentures that don’t have to pay us back until after we die. And our safe side, which is supposed to keep our principal intact and provide us with income, might actually be losing -26%, as it did in 2022.
 
When there is so much risk, concentrated in assets that are supposed to be “safe,” we must be the Boss of Our Money, and learn the basics in order to move past the sales-speak (and potential underperformance or losses) and into a time-proven 21st Century strategy for a Debt World. Understanding what we own is not a second job. It’s the life math that we all should have received in high school. We are literally drowning in financial noise and oftentimes misinformation. Tuning it out is good for our mental and physical health. Tuning into time-proven systems requires learning them. However, thereafter, we can move into a sound Financial Home that only needs Spring Cleaning once or twice a year.
 
You can learn what’s safe at our Financial Freedom Retreat. Join us!

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Join us for our Online Spring Financial Freedom Retreat April 25-27, 2025. Email [email protected] or call 310-430-2397 to learn more. Register by Feb. 28, 2025, to receive the best price. Click for testimonials, pricing, hours & details.

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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. 
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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.