Interest Rate Shift: Investors Seek New High-Yield Strategies

The announcement by Jerome Powell, the Chairman of the Federal Reserve, that an interest rate cut in September might be possible has moved the financial markets. Although Powell emphasized that no decisions have been made yet, he clarified: "The general sentiment of the committee is that the economy is approaching a point where it will be appropriate to lower our key interest rate." This statement, along with unemployment numbers peaking at 249,000 in 2024, and the ISM Purchasing Managers' Index hitting an eight-month low, caused government bond yields to plummet. For the first time since February, they fell below 4%. The ten-year benchmark yield traded at 3.997%. Disappointing economic data also weighed down the stock markets. Amid these shifts, many investors are wondering what comes next. In recent years, high interest rates made high-yield savings accounts, CDs, and some bonds more attractive. However, now the money might flow in a different direction, and investors continue to have many options for high returns. When today's AI startups go public, most of the rapid growth will already have occurred – here's how to stay ahead of the curve. Kimco Realty currently shows a dividend yield of 4.63%. The Real Estate Investment Trust (REIT) owns grocery-anchored shopping centers and mixed-use properties in the U.S., reporting 567 shopping centers and mixed-use properties with a total rental space of 101 million square feet. Kimco reported on August 1st a fund from operations (FFO) growth of 5.1% compared to the same period in 2023 to $0.41 per diluted share. Overall occupancy stood at 96.2%, and small shop occupancy rose to 91.7%, hitting its previous record high. CEO Conor Flynn emphasized: "We see these positive trends continuing, and with $63 million in future cash flows from signed but not yet active leases, we feel comfortable raising our annual guidance." Even with an economic downturn, Kimco's position in essential retail locations should secure stable dividends. Not all high-yield opportunities exist in the stock market. Private real estate investments offer another option. Arrived Homes allows investments in individual residential properties as well as a private credit fund giving access to a pool of short-term loans secured by residential properties. The fund aims for a net annual return of 7% to 9% and pays out to investors monthly. Unlike other private credit funds, the minimum investment is only $100, making it accessible to a broad range of investors. Opportunities also arise outside the U.S. market. The iShares International Select Dividend ETF targets high-dividend stocks in non-U.S. developed markets. The five-year performance is 4.48%, and the current dividend yield is 6.2%. Major holdings include British American Tobacco, BHP Group, and TotalEnergies. The fund has an expense ratio of 0.51%. Its three largest international markets are the United Kingdom, Italy, and Spain. Even though the ten-year Treasury yield has fallen below 4%, it does not guarantee that it will stay there. Further developments depend on Powell's statements and key economic data. However, it is certain that investors will need to prepare for potential changes and consider various strategies for consistent high returns.