How to get reliable income from stocks

In these sideways markets, gaining income from your portfolio is key. But before you buy your next high-yield stock, make sure it passes these four tests, says Tim Bennett.

Following the rampant bull market of the 1980s and 1990s, we now seem to be stuck in a sideways' market. Most major indices have yet to regain the tech-boom highs of 2000, and they have fluctuated wildly in between, hitting significant lows in both 2003 and 2009. So how do you make money in this sort of market?

There's one simple answer: income. If you can't rely on big gains from capital growth, you had better make sure your investment is paying you a decent yield. "Dividends are a critical driver of equity returns over time but especially when markets are range-bound or falling," as Graham Secker at Morgan Stanley's Global Equity Strategy Team puts it in a recent research paper.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.