Identifying the most compelling opportunities for income in 2025

Income investing: Where we have conviction

Portfolio Manager Adam Kramer and his team favor floating-rate securities, private credit, dividend-paying MLPs, and Canadian dividend-paying stocks.

Key Takeaways

• Looking ahead to the remainder of 2025, Portfolio Manager Adam Kramer sees compelling opportunities to invest in floating-rate securities and private credit. Why? Because when compared with high-yield bonds, these two categories provide a yield advantage, a duration of less than one year, and a higher seniority in the capital structure.
• Within the U.S. high-yield bond market, Adam has favored B- and BB-rated securities, despite relative tight spreads over U.S. Treasurys. He's seeing good opportunities where the current yield is two or three times the duration, representing what he believes is an appealing risk ratio.
• Kramer is also finding compelling investments in dividend-paying master limited partnerships and oil tanker stocks. These companies offer attractive high-single-digit dividend yields, compelling valuations, and they tend to be free-cash-flow-breakeven during cycle lows.
• In his view, the Canadian dividend-paying stocks of certain utility, industrial, energy, and even financial companies trade at a discount to U.S equities. These stocks also boast strong balance sheets and pay attractive dividends, while convertible bonds are the most appealing they’ve been since 2020.
• As portfolio manager of Fidelity Multi-Asset Income Fund, Adam has the flexibility to invest across the full spectrum of income-oriented asset classes, with a goal of “offering a high enough level of current income to dampen the blow in a down market, but conversely, to contribute to an equity-like return in rising markets.”