Easy Income Portfolio: July 2026 Edition

Income Is Still Available, but Selectivity Matters More Than Ever

The financial markets continue to provide plenty of noise, drama and breathless predictions, which is fortunate for the financial media because calm markets do not generate many clicks.

Fortunately, the Easy Income portfolio was not designed to profit from headlines. It was built to collect substantial amounts of cash while owning assets that do not all respond to the same economic and market forces.

That diversification remains especially valuable today.

The broad equity markets have continued to advance, supported by strong corporate earnings and enthusiasm surrounding artificial intelligence, energy infrastructure and financial stocks. Expectations have also become extremely high. Analysts expect S&P 500 earnings to rise more than 20% in the second quarter, with technology and energy providing much of the growth.

The market is not cheap, and companies that merely meet expectations may find that investors are no longer impressed.

Our approach remains different. We are not trying to predict which artificial intelligence company will discover the next digital miracle. We are investing in cash flows generated by loans, pipelines, mortgages, royalties, preferred dividends, bank capital and discounted pools of securities.

The portfolio continues to produce income while giving us exposure to several areas where prices remain below underlying value.

The Credit Dashboard Remains in Nirvana

Our four credit regimes are Nirvana, Caution, Crisis and Recovery.

We remain in the Nirvana regime. Credit is widely available, financial conditions are loose and defaults are not threatening the financial system. That is good news for the economy and the portfolio’s income streams. It is less exciting for bargain hunters because spreads remain tight.

As of July 13, the ICE BofA U.S. High Yield Index option-adjusted spread was 269 basis points. That is an extremely modest premium over comparable Treasury securities and remains well below levels that usually signal genuine fear.

The ICE BofA CCC and lower spread was 972 basis points. The market is distinguishing between decent credits and its weakest borrowers. Investors are not demanding much compensation for owning the broad high-yield market, but they are charging heavily leveraged and troubled companies a much higher price.

The AA corporate spread was just 56 basis points. Investors are receiving almost no additional compensation for owning the obligations of high-quality corporations rather than Treasury securities.

The Chicago Fed National Financial Conditions Index stood at minus 0.515 for the week ended July 3. Negative readings indicate that financial conditions are looser than their historical average. Conditions also became slightly looser during June.

The dashboard can be summarized simply:

Broad high yield: 269 basis points
CCC and lower: 972 basis points
AA corporate bonds: 56 basis points
National Financial Conditions Index: Minus 0.515

Credit markets are not signaling an approaching recession or financial crisis. They are telling us that investors are comfortable, perhaps too comfortable.

We should continue collecting income, but this is not the time to abandon underwriting standards or chase the weakest credits merely because they offer another percentage point or two of yield.

Private Credit and Business Development Companies

Private credit and publicly traded business development companies remain the most controversial part of the income markets.

That is one reason they are also among the most interesting.

The private credit industry is dealing with several real problems. Borrowers that took on floating-rate loans when money was cheap have endured several years of elevated interest expense. Some have responded by requesting covenant amendments, extending maturities, capitalizing interest or using payment-in-kind arrangements instead of paying all their interest in cash.

Software loans remain a particular concern. Many private equity firms paid enormous multiples for software businesses under the assumption that recurring revenue made them nearly bulletproof. Artificial intelligence has raised questions about the durability of some of those businesses at the same time that higher interest expense is squeezing cash flow.

Those risks are real. They are not evidence that the entire private credit industry is collapsing.

KBRA’s review of rated BDCs found that the sector continued to demonstrate relative financial stability through the first quarter despite market volatility, credit concerns and pressure on earnings.

The more immediate problem is a mismatch between the amount of money being raised and the number of attractive new loans available. North American direct-lending funds raised $16.25 billion in the second quarter, the strongest fundraising total in two years. Actual lending volume fell about 55% to $33.59 billion, the lowest quarterly volume since 2023.

That creates two competing effects.

Competition for new loans can push spreads lower and weaken lender protections. At the same time, cautious deployment by established managers suggests they are not blindly throwing money at every private equity sponsor who walks through the door carrying a spreadsheet and an optimistic EBITDA adjustment.

Our preference remains unchanged. We want BDCs affiliated with large, experienced private equity and private credit managers. Firms such as Ares, Blackstone, Blue Owl, KKR, Oaktree, Apollo, Barings and Goldman Sachs have larger sourcing networks, deeper restructuring capabilities and greater access to information than smaller operators.

When a borrower experiences trouble, size and experience matter. A lender with a large restructuring team and relationships throughout the private equity industry has more options than one whose recovery strategy consists of crossing its fingers.

Publicly traded BDCs have already discounted a substantial amount of bad news. The Raymond James equal-weighted BDC index had produced a negative 11.67% total return for 2026 through July 9, while its market-cap-weighted index was down 9.97%. The S&P 500, by comparison, was up 17.08%.

That is a meaningful divergence.

Many BDCs trade at discounts of 15% to 25% from reported net asset value while offering dividend yields in the 10% to 13% range. The market is effectively saying that reported loan values are too high, future credit losses will rise, dividends will be reduced or some combination of all three.

There will be additional dividend cuts among weaker BDCs. There will also be loans placed on nonaccrual status and markdowns to net asset value. Nobody should own this sector under the impression that lending money to leveraged middle-market businesses is risk-free.

The market may nevertheless be applying a sectorwide discount to what are primarily manager-specific problems.

The rebound case does not require perfection. Lower short-term rates would reduce pressure on borrowers. A revival in mergers, acquisitions and leveraged buyouts would increase demand for new loans. Stabilizing net asset values would restore confidence. Continued dividend coverage would eventually force investors to recognize that a 20% discount to asset value and a double-digit yield may be too pessimistic.

The rebound may not happen in a straight line, but the combination of high current income and deeply discounted share prices creates an attractive long-term setup in the better-managed BDCs.

Oil, Gas, Royalty Trusts and Midstream Assets

The energy sleeve continues to perform the job for which it was selected. It provides high levels of cash income tied to real assets and energy production rather than corporate borrowing or interest-rate spreads.

Energy markets have been volatile as geopolitical events caused oil and natural gas prices to surge and retreat. The income characteristics of our holdings vary significantly within the sector.

Royalty trusts and mineral interests have direct exposure to production volumes and commodity prices. Higher oil and natural gas prices can increase distributions quickly. Lower prices will reduce them just as quickly. These are variable-income securities, not traditional dividend-growth stocks.

The attraction is that royalty owners generally avoid most drilling and development costs. They receive a contractual share of production revenue while operators provide the capital and do the work. When energy prices are strong and drilling activity remains healthy, royalty interests can produce exceptional free cash flow.

Midstream assets are different. Pipelines, processing facilities, storage terminals and export infrastructure usually earn fees based on volumes rather than the daily price of oil or natural gas. They are the toll roads of the energy business.

The Alerian Midstream Energy Index produced a 22.9% total return during the first quarter as geopolitical tensions drove energy prices higher. Midstream companies entered the period with stronger balance sheets, lower capital requirements and more disciplined management teams than they possessed during the industry’s old boom-and-bust years.

The lasting opportunity is not based solely on war or an oil-price spike. Growing electricity demand, liquefied natural gas exports, data center construction and industrial expansion all require more natural gas infrastructure. Existing pipelines are also becoming more valuable because permitting and building replacement assets remain difficult and expensive.

We should expect royalty distributions to fluctuate. Midstream distributions should be more stable. Together, they give the portfolio exposure to energy prices, infrastructure demand and inflation-sensitive real assets.

Residential Mortgage-Backed Securities

Residential mortgage-backed securities continue to offer a better balance of yield and credit protection than many parts of the corporate bond market.

Agency mortgage-backed securities carry minimal credit risk because principal and interest payments are guaranteed by government-sponsored entities or the federal government. Their primary risks are interest rates, prepayments and changes in mortgage spreads.

Mortgage rates remain elevated enough that refinancing activity is limited. That reduces prepayment risk for many existing mortgage pools and allows investors to collect the underlying cash flows for longer periods.

The market is also highly liquid. Mortgage-backed securities issuance reached approximately $1.9 trillion through June, an increase of 25.6% from the comparable period last year. Average daily trading in agency mortgage securities rose nearly 10%.

Mortgage spreads have tightened from their widest levels, but they remain more attractive relative to history than investment-grade corporate spreads. There is little reason to take large amounts of corporate credit risk when government-backed mortgage securities offer competitive yields with stronger credit protection.

Nonagency residential mortgages require greater selectivity, but residential credit performance remains supported by substantial homeowner equity and the generally higher underwriting standards adopted after the global financial crisis.

The housing market is not without stress. Affordability is poor, transaction volume remains weak and delinquencies may rise if unemployment increases. That does not automatically translate into significant losses for seasoned mortgage securities with conservative loan-to-value ratios and structural credit protection.

Commercial Mortgage-Backed Securities

Commercial mortgage-backed securities remain the most visibly stressed part of the real estate debt markets.

The headline numbers are not pretty.

The Trepp CMBS delinquency rate declined by 20 basis points in June, but it remained elevated at 7.35%. The improvement was driven largely by the cure of a significant lodging loan rather than broad improvement across commercial real estate.

The CMBS special-servicing rate increased by 34 basis points to 11.20%. Office, retail and some multifamily properties continue to struggle with higher refinancing costs, weak occupancy, rising expenses or property values that no longer support the original loan balance.

This is not a sector where buying the market indiscriminately makes sense.

The opportunity lies in senior securities with substantial credit enhancement, conservative attachment points and limited exposure to the weakest office properties. Even when individual properties default, senior bonds can continue receiving principal and interest because subordinate tranches absorb losses first.

CMBS remains a security-selection market. The problems are real, but they are also widely known. Investors who understand the collateral and capital structure can still earn attractive yields without making heroic assumptions about office building values.

High-Yield and High-Grade Corporate Bonds

Broad high-yield bonds remain supported by loose financial conditions and continued economic growth. The concern is valuation, not an imminent wave of defaults.

At a spread of 269 basis points, the market is not paying investors generously to assume below-investment-grade credit risk. High-yield bonds can still generate respectable returns because Treasury yields are elevated, but most of that return is coming from the underlying yield rather than an unusually attractive credit spread.

Higher-quality high yield, particularly BB-rated bonds and senior secured loans, remains more appealing than reaching into the lowest-quality issuers.

The 972-basis-point spread on CCC-rated bonds suggests that genuine distress is concentrated among the weakest companies. That is healthier than a market in which every issuer trades at the same price, but it also tells us not to ignore the growing divide between strong and weak borrowers.

We remain willing to own diversified high-yield exposure, but we are not pretending that current spreads provide a large margin of safety.

Discounted Closed-End Fund Activism and Arbitrage

Closed-end fund discounts continue to provide one of the most unusual opportunities in the income markets.

A closed-end fund can own a portfolio worth $10 per share while its stock trades at $8.50. Investors receive the income generated by $10 of assets while paying only $8.50. That alone can increase the effective yield.

Activists can create an additional source of return by pressing fund boards to conduct tender offers, repurchase shares, merge funds or convert closed-end funds into open-end structures.

Saba Capital, Bulldog Investors and Karpus Investment Management have historically accounted for most closed-end fund activism. Their involvement can pressure boards to address persistent discounts.

The legal environment has become somewhat less favorable for activists. On June 11, the Supreme Court ruled that Section 47(b) of the Investment Company Act does not create an implied private right of action allowing investors to seek rescission of contracts that allegedly violate the act. The ruling narrowed one avenue available to activists, but it did not eliminate proxy contests, tender demands or other shareholder pressure.

Our thesis does not require every activist campaign to succeed. We are buying discounted assets that produce income. Activism provides a possible catalyst for the discount to narrow.

That is arbitrage with a dividend while we wait.

Community Bank Debt Securities

Community bank debt remains one of the quieter opportunities in fixed income.

The banking system is much healthier than the headlines following the 2023 bank failures would suggest. Deposit pressures have moderated, net interest margins are stabilizing and most community banks maintain substantial regulatory capital.

Credit costs are rising gradually, especially in commercial real estate and small-business lending, but there is little evidence of widespread balance-sheet distress. The FDIC’s 2026 Risk Review described nonbank financial institution loan performance as favorable while noting tighter underwriting and weaker demand in business lending.

Community and regional bank debt issuance approached $8 billion in 2025, the third-highest annual total on record, and issuance is expected to remain healthy in 2026.

Subordinated bank debt offers higher yields because it sits below deposits and senior obligations in the capital structure. That makes issuer selection essential. We want well-capitalized banks with manageable commercial real estate exposure, diversified deposit bases and conservative credit histories.

The same characteristics that attract us to undervalued community bank stocks apply to their debt. Strong capital, low problem assets and sensible management provide a substantial margin of safety.

Bank Risk Transfer Securities in the United States and Europe

Bank risk transfer securities are rapidly becoming an important institutional income market.

In a synthetic risk transfer, a bank retains loans on its balance sheet but transfers a defined portion of the credit risk to outside investors. The bank pays investors a premium, and investors absorb losses if defaults in the reference portfolio exceed specified levels.

Europe remains the largest market, although issuance by U.S. banks has increased.

European and British bank use of synthetic risk transfers rose 27% in 2025. Thirty-five of 56 large banks surveyed used the structures, covering approximately €579 billion of assets and freeing about €464 billion of risk-weighted assets.

The European Central Bank reported that issuance volume almost doubled between 2023 and 2025 and increased about 45% during 2025 alone.

The Bank for International Settlements concluded that risks associated with the market appear modest at present and that exposures remain small relative to overall bank balance sheets. It also noted that North American banks are becoming more active issuers.

These securities can offer attractive yields because they absorb the first or intermediate layer of losses in diversified loan pools. They also benefit from extensive bank underwriting data and clearly defined structural protections.

They are not risk-free. Investors need to understand the reference pool, attachment point, loss triggers and the bank’s incentives. Regulators are paying closer attention as the market expands.

For experienced managers, however, risk transfer securities can provide equity-like income with returns driven by diversified pools of bank loans rather than movements in the stock market.

High-Quality Asia-Pacific Sovereign Bonds

High-quality sovereign bonds in the Asia-Pacific region continue to improve the portfolio’s geographic and interest-rate diversification.

Asian bond markets benefited during 2025 from lower policy rates, tighter credit spreads and a weaker U.S. dollar. The 2026 outlook remains supported by modest inflation, accommodative monetary conditions and resilient regional growth.

Australia and New Zealand offer developed-market legal systems, credible central banks and relatively attractive sovereign yields. Other high-quality Asian issuers provide exposure to economies with different inflation cycles and monetary policies than the United States.

That difference is useful. U.S. Treasury yields may remain pressured by federal deficits, inflation concerns and heavy issuance even if growth slows. Asia-Pacific bonds may respond to local inflation and central bank policy rather than simply following the U.S. market.

S&P Global expects growth in Asia-Pacific sovereign borrowing to slow to less than 5% in 2026. More moderate supply growth can help support bond prices when institutional demand remains strong.

Currency movements will add volatility, but they can also provide diversification if the U.S. dollar weakens over time.

Preferred Stocks Trading Below Par

Preferred stocks remain one of the simplest portfolio ideas.

We can buy securities with a $25 liquidation preference for less than $25, collect dividends that frequently yield 6% to 8%, and retain potential capital appreciation if interest rates decline or the securities are eventually redeemed at par.

The preferred market is dominated by banks, insurance companies, utilities and real estate companies. Credit quality is generally higher than the yield suggests, although preferred dividends rank below interest payments on debt and may be suspended under severe stress.

Interest-rate risk remains significant. Perpetual preferred stocks can decline when long-term rates rise because they have no fixed maturity date. That is the primary reason many high-quality preferreds continue trading below their $25 par value.

We are being paid to wait. Current income is attractive, and any sustained decline in long-term interest rates could produce capital gains in addition to the dividend stream.

Portfolio Outlook

The Easy Income portfolio remains positioned exactly where I want it.

Credit conditions are loose. That supports BDC borrowers, high-yield issuers, banks and securitized credit. It also means credit spreads are tight and we should not expect the bond market to hand us extraordinary bargains without a period of volatility.

Private credit is experiencing genuine stress, but it is not experiencing a systemwide collapse. The better BDCs are trading at discounts that already anticipate rising nonaccruals, lower earnings and potential dividend reductions. I expect the strongest managers to emerge with larger market shares and better future lending opportunities.

Energy infrastructure continues to generate substantial free cash flow. Royalty investments provide commodity-sensitive income, while midstream assets supply more stable, volume-based distributions.

Residential mortgages continue to offer attractive relative value. Commercial mortgages require much greater caution, but senior securities can still provide compelling yields with substantial structural protection.

Closed-end fund discounts give us the opportunity to own $1 of assets for 80 or 90 cents while activists work to unlock value. Community bank debt and bank risk transfer securities provide income backed by generally strong capital levels and diversified loan portfolios.

Asia-Pacific sovereign bonds and discounted preferred stocks provide additional diversification from traditional U.S. corporate credit.

There will be price volatility. There will always be price volatility.

The portfolio is not designed to eliminate volatility. It is designed to convert volatility into opportunity while continuing to send us cash.

That is exactly what it is doing.

Understanding the Portfolio Performance

The most important point when reviewing the portfolio spreadsheet is that the performance columns show price movement only. That is useful information, but it provides an incomplete and occasionally misleading picture of an income portfolio.

These securities were not purchased because I expected every one of them to go straight up every month. They were purchased to generate substantial distributions from a diversified group of income-producing assets.

A fund yielding 10% can decline 3% in price during the year and still produce a positive total return.

Using current indicated yields as a rough guide, the portfolio’s income has offset a significant portion of the reported price weakness. Several holdings that appear to be down for the year are approximately flat or positive after distributions. The strongest performers have produced outstanding total returns.

Virtus InfraCap U.S. Preferred Stock ETF (PFFA – NYSE) — Yield: 9.79%

The Virtus InfraCap U.S. Preferred Stock ETF declined 0.73% during the latest month and was down 2.76% for the year through July 13.

PFFA has continued paying a monthly distribution of $0.1725 per share, or $2.07 annualized. Adding approximately half a year of distributions to the price change suggests a year-to-date total return of roughly 2.5%. The monthly distribution also almost completely offset the latest decline.

Preferred stocks remain sensitive to long-term interest rates because most have very long maturities or are perpetual securities. The fund also uses leverage, which magnifies both income and price volatility.

PFFA nevertheless owns preferred securities from generally substantial financial, utility and real estate issuers, and many holdings trade below their $25 liquidation values.

The price has been mildly disappointing. The income stream has not. We continue to collect almost 10% annually while waiting for lower long-term rates or improving investor demand to lift preferred prices.

Special Opportunities Fund (SPE – NYSE) — Yield: 14.85%

Special Opportunities Fund was almost unchanged during the month, declining just 0.07%. Its price was down 7.42% year to date, but income has offset nearly all that decline, leaving the approximate total return slightly positive.

SPE was recently trading at approximately a 14.2% discount to net asset value and paying a monthly distribution of $0.1087 per share.

The persistent discount is not pleasant to look at, but it is also the source of the opportunity. We are buying a portfolio of assets for about 86 cents on the dollar and receiving distributions based on the entire underlying asset base.

SPE also gives us exposure to closed-end fund activism, tender offers, liquidations and other special situations. The discount may remain wide for an extended period. We are being paid nearly 15% annually while management looks for ways to close the gap between price and asset value.

Simplify MBS ETF (MTBA – NYSE) — Yield: 5.02%

The Simplify MBS ETF declined 0.62% for the month and 2.48% year to date on a price-only basis. Its indicated yield has offset almost all that decline, leaving the approximate year-to-date total return close to flat.

MTBA invests primarily in agency mortgage-backed securities. These securities have minimal conventional credit risk because principal and interest payments are guaranteed by government-sponsored entities or the federal government. The primary risks are interest rates, mortgage spreads and borrower prepayments.

Agency mortgages have struggled to attract enthusiastic buyers because bank demand remains below historical levels and interest-rate volatility remains elevated. The positive side is that this lack of enthusiasm has preserved relatively attractive yields and spreads.

MTBA is doing what it was hired to do. It is providing a respectable income stream from high-quality mortgage assets without exposing the portfolio to significant corporate credit risk.

iShares Mortgage Real Estate ETF (REM – NASDAQ) — Yield: 8.70%

The iShares Mortgage Real Estate ETF gained 1.78% during the month and was up 0.45% year to date before dividends.

Including its indicated yield, the estimated year-to-date total return is approximately 5.2%. The latest month’s estimated total return was about 2.5%.

REM owns a diversified group of mortgage real estate investment trusts investing in agency mortgages, residential credit, commercial mortgages and mortgage-servicing assets. The underlying companies use leverage, making their book values and earnings sensitive to funding costs, interest-rate volatility and credit spreads.

The stabilization in REM is encouraging. Agency mortgage REITs have benefited from better asset yields and the eventual prospect of reduced funding costs. Commercial mortgage REITs remain more complicated because office and transitional real estate loans continue to require workouts.

REM gives us diversified exposure without forcing us to determine which mortgage REIT will win every quarter. The yield remains attractive, and the price action suggests investors are beginning to recognize improving earnings potential.

Saba Closed-End Funds ETF (CEFS – NYSE) — Yield: 6.04%

The Saba Closed-End Funds ETF was essentially flat during the month, gaining 0.08%, but remained one of the portfolio’s strongest holdings with a 9.90% price gain year to date.

Including income, the estimated year-to-date total return is approximately 13.2%.

CEFS purchases discounted closed-end funds and uses activist techniques to encourage boards to narrow those discounts. The fund may also hedge part of its market exposure.

This is exactly how closed-end fund arbitrage is supposed to work. We collect distributions from discounted funds while Saba pressures managers to conduct tender offers, repurchase shares or otherwise address the discount.

The strategy will not outperform every month. It has nevertheless delivered one of the portfolio’s best combinations of price appreciation, income and low correlation with traditional fixed income.

State Street Blackstone Senior Loan ETF (SRLN – NYSE) — Yield: 7.41%

The State Street Blackstone Senior Loan ETF gained 0.14% during the month but was down 2.27% year to date on a price basis.

The decline is more than offset by income. The approximate total return for the year is 1.7%, while the estimated monthly return was about 0.8%.

SRLN invests in floating-rate senior secured loans. The portfolio’s income adjusts with short-term rates, allowing it to maintain a substantial yield without taking the same duration risk as traditional fixed-rate bonds.

The primary risk is credit. Borrowers are frequently leveraged companies, and lower-quality borrowers are dealing with higher interest costs and slowing cash-flow growth.

The senior secured position provides meaningful protection. These loans sit near the top of the capital structure and generally have claims on company assets. SRLN remains a reasonable way to collect floating-rate income without making individual leveraged-loan selections.

Tortoise Energy Infrastructure Corp. (TYG – NYSE) — Yield: 12.05%

Tortoise Energy Infrastructure was one of the portfolio’s strongest monthly performers, rising 2.44%. It was up 6.65% year to date before distributions.

Including income, the estimated year-to-date total return is approximately 13.2%. The estimated monthly total return was about 3.4%.

TYG owns midstream energy infrastructure, including pipelines, storage facilities, gathering systems and other assets that move oil and natural gas from producers to end users. The fund uses leverage, which increases both its distribution capacity and market volatility.

The quarterly price change of negative 9.89% demonstrates that this remains a volatile holding. The year-to-date result shows why we are willing to tolerate that volatility.

Midstream companies continue to benefit from disciplined capital spending, growing liquefied natural gas exports, increased electricity demand and the need for more natural gas infrastructure.

The distribution is high, the underlying assets are essential and the long-term demand outlook remains favorable.

Angel Oak Financial Strategies Income Term Trust (FINS – NYSE) — Yield: 10.70%

Angel Oak Financial Strategies Income Term Trust gained 0.16% during the month but was down 2.80% year to date on a price-only basis.

Including estimated income, the year-to-date total return is approximately 3%, and the monthly total return is approximately 1.1%. FINS also declared another $0.115 monthly distribution for July, payable July 31.

The fund focuses heavily on debt securities issued by community banks and other financial institutions. Angel Oak describes the strategy as banking-sector debt-centric, with relatively low historical correlations to other market sectors.

Community bank credit performance remains generally sound, although commercial real estate exposure and deposit costs require careful monitoring.

FINS provides access to a specialized corner of the fixed-income market that is difficult for individual investors to duplicate. The recent price weakness has been more than offset by distributions.

abrdn Asia-Pacific Income Fund (FAX – NYSE) — Yield: 13.61%

The abrdn Asia-Pacific Income Fund rose 1.22% during the month but remained down 5.18% year to date on a price basis.

The indicated yield has made an enormous difference. The estimated year-to-date total return is approximately 2.2%, and the latest month’s estimated total return was about 2.4%.

FAX owns sovereign and corporate bonds across the Asia-Pacific region. Its performance is affected by local interest rates, bond spreads and currency movements against the U.S. dollar.

The high distribution rate should not be confused with the yield on a plain portfolio of government bonds. Closed-end fund leverage, currency exposure and the managed distribution policy all contribute to the payout.

The attraction is diversification. Australia, New Zealand and Asian bond markets do not always move in lockstep with U.S. Treasuries. Currency exposure can hurt during periods of dollar strength, but it can add significantly to returns when the dollar weakens.

The price decline has been frustrating, but shareholders have been paid generously while waiting for a more favorable currency and global interest-rate environment.

Dorchester Minerals LP (DMLP – NASDAQ) — Yield: 9.38%

Dorchester Minerals was the portfolio’s strongest holding by a wide margin. The units gained 0.86% during the month and 21.20% year to date before distributions.

Adding the indicated yield produces an estimated year-to-date total return above 26%.

Dorchester declared a first-quarter distribution of $0.475036 per unit, payable May 14. Royalty-property receipts were approximately $26.6 million for the period. The distribution was below the $0.755712 paid for the previous quarter, illustrating the variable nature of royalty income.

DMLP does not operate drilling rigs or assume the same level of development expense as an exploration and production company. It owns royalty and net-profits interests and receives a share of production revenue.

Distributions will rise and fall with commodity prices, production volumes and the timing of payments. That volatility is the price we pay for owning an asset-light business with no debt and direct exposure to oil and natural gas production.

DMLP has delivered substantial income and exceptional price appreciation. It remains a core real-asset holding, although nobody should assume that a 20% price gain will repeat every six months.

ArrowMark Financial Corp. (BANX – NASDAQ) — Yield: 8.93%

ArrowMark Financial Corp. gained 3.07% during the month, one of the portfolio’s strongest monthly results. Its price was still down 7.88% year to date.

Including estimated distributions, the year-to-date total return remains approximately negative 3%, but that is far better than the reported price decline.

BANX invests primarily in regulatory capital securities issued by U.S. and European banks. These securities allow banks to transfer part of the credit risk from designated loan portfolios to outside investors.

The asset class continues to expand as banks seek to manage regulatory capital more efficiently. Investors receive high coupons because they agree to absorb a defined layer of losses if credit performance in the reference portfolio deteriorates.

The recent rebound is encouraging. Bank risk transfer securities are complex and relatively illiquid, so market prices can move more sharply than the actual credit performance of the underlying portfolios.

The income remains well above traditional investment-grade bonds, and actual banking-system credit losses have not approached the levels implied by BANX’s year-to-date price decline.

Nuveen Real Asset Income and Growth Fund (JRI – NYSE) — Yield: 12.20%

Nuveen Real Asset Income and Growth Fund gained 2.69% for the month but remained down 3.20% year to date before distributions.

Including income, the estimated year-to-date total return is roughly 3.4%. The estimated monthly total return was approximately 3.7%.

JRI owns a diversified portfolio of real estate securities, infrastructure companies, preferred stocks and debt issued by real-asset businesses. It provides broad exposure to income-producing physical assets rather than relying on one property type or industry.

The fund’s leverage and closed-end structure create substantial price volatility. Higher long-term rates have also weighed on utilities, REITs, infrastructure companies and preferred securities.

The latest month’s rebound suggests investors may be starting to recognize the value in these beaten-down income sectors. JRI is not a low-volatility bond substitute, but it provides a high level of income and diversified exposure to real assets at depressed valuations.

VanEck BDC Income ETF (BIZD – NYSE) — Yield: 12.12%

The VanEck BDC Income ETF declined 0.36% during the month and was down 11.32% year to date on a price-only basis.

The indicated yield has offset more than half the decline. The approximate year-to-date total return remains negative 4.8%, while the latest month was modestly positive after income.

VanEck reported a 12-month yield of 12.23% and a 30-day SEC yield of 9.93% as of July 13. BIZD’s July distribution was approximately $0.239 per share, down from $0.4818 paid in April.

The difference partly reflects irregular quarterly distribution patterns among the underlying BDCs, but it also illustrates the earnings pressure facing the sector.

BDC share prices have been hit by concerns about falling base rates, spread compression, payment-in-kind income and rising nonaccrual loans. Those concerns are not imaginary. Several weaker BDCs will probably reduce dividends.

The decline has also created the conditions for a rebound. Many BDCs are trading well below net asset value while their underlying loan portfolios continue to produce substantial cash income. Lower rates would reduce borrower stress, and renewed merger and acquisition activity would improve loan originations.

BIZD provides broad exposure to the sector. We are collecting a double-digit yield while waiting for the market to distinguish between genuine credit deterioration and excessive pessimism.

WisdomTree Private Credit and Alternative Income Fund (HYIN – NYSE) — Yield: 13.17%

The WisdomTree Private Credit and Alternative Income Fund gained 0.98% during the month but was down 9.76% year to date before distributions.

HYIN currently reports a distribution yield of 11.44% and a 30-day SEC yield of 12.73%. Using the spreadsheet’s indicated yield, the estimated year-to-date total return is approximately negative 2.6%. The estimated monthly total return was slightly above 2%.

HYIN owns a basket of alternative credit companies, including BDCs, mortgage REITs, private credit managers and other specialty lenders. It tracks an equal-weighted group of approximately 35 alternative-credit vehicles.

The fund has been punished by weakness in almost every public-market security associated with private credit. Investors fear credit losses, lower interest income and excessive competition for new loans.

HYIN gives us broader exposure than BIZD because it includes other forms of alternative credit. It also carries a high reported expense ratio because acquired-fund expenses from the underlying vehicles are included in the calculation.

The current price already reflects considerable pessimism. Credit conditions must be monitored carefully, but an approximate 13% yield pays us well while we wait for sentiment to recover.

Infrastructure Capital Bond Income ETF (BNDS – NYSE) — Yield: 7.99%

The Infrastructure Capital Bond Income ETF declined 0.15% during the month but remained up 0.77% year to date on a price-only basis.

Adding estimated distributions produces a year-to-date total return of approximately 5.1%. The estimated monthly total return was approximately 0.5%.

BNDS seeks to maximize current income by investing at least 80% of its assets in fixed-income securities, primarily corporate bonds but also government and municipal debt.

The fund maintained a monthly distribution of $0.34 per share throughout the first half of 2026.

This has been one of the portfolio’s steadier holdings. It has provided positive price performance, a substantial monthly distribution and less volatility than the BDC, energy and closed-end fund positions.

The broad high-yield market is expensive based on credit spreads, so we should not expect dramatic capital appreciation without a decline in Treasury yields. BNDS continues to fulfill its role as a diversified core bond-income holding.

Portfolio Perspective

The spreadsheet shows an average monthly price gain of approximately 0.9% across the portfolio’s 15 holdings. The average indicated yield is approximately 10.5%.

Using one-twelfth of the current yield as a rough estimate of monthly income, the portfolio’s estimated average total return for the latest month was approximately 1.8%.

The average year-to-date price return was slightly negative, but that figure was dominated by weakness in BIZD, HYIN, BANX and SPE. Adding an estimated six and a half months of distributions turns the portfolio’s approximate average year-to-date return positive.

The largest total-return contributors have been DMLP, TYG and CEFS. REM, BNDS, JRI, FINS, PFFA and FAX have also produced positive or approximately positive results after distributions.

BIZD, HYIN and BANX remain the principal laggards even after income, although their losses are far smaller than the price-only figures suggest.

This is why income portfolios must be judged on total return and cash generation, not price movement alone. The portfolio is producing an average indicated yield above 10%, and those distributions have done exactly what they were supposed to do. They have cushioned periods of price weakness, converted several apparent losses into positive returns and provided cash that can be reinvested at attractive yields.

We continue to monitor credit quality closely, particularly in private credit, BDCs, commercial mortgages and bank risk transfer securities. There is no reason to ignore deteriorating loans simply because the distributions are attractive.

There is also no reason to panic because a 12% yielding investment declines 5% in market price while continuing to pay us.

The Easy Income portfolio remains diversified across credit, mortgages, real assets, bank securities, energy infrastructure, sovereign bonds and preferred stocks. It continues to generate substantial cash, and the income is meaningfully better than the price-only performance figures suggest.