High Yield For Granny (Part 2): Savvy 'Widows & Orphans' Portfolio Re-Visited

Our "High Yield for Granny" article (link here) last March introduced the idea that you could achieve an "Income Factory" strategy at various levels of yield, risk and return. In particular, we introduced a portfolio of solid closed-end funds whose average distribution was about 8% as an alternative to our core "Savvy Senior" Income Factory that currently pays a distribution of 11.6%.
We showed that, through the power of re-investment and compounding, an 8% stream of income doubles and re-doubles about every 9 years, so a $100,000 portfolio yielding 8%, re-invested annually, would generate the following approximate yearly income stream:
$8,000 in Year 1, $15,992 by Year 10, $34,525 by Year 20, $74,538 by Year 30, and $160,922 by Year 40. That is clearly "growth" by anyone's definition and would be attractive to investors of whatever age who wanted to grow a steady long-term income stream. We also described, by contrast, how an 11% income stream, re-invested and compounded, would double and re-double itself about every 6.5 years. So the same $100,000, invested to yield 11%, would generate the following approximate income stream:
$11,000 in Year 1, $28,138 by Year 10, $79,896 by Year 20, $226,860 by Year 30, and $644,152 by Year 40. The ability to generate over $600,000 by year 40 in the more aggressive 11% portfolio, versus $160,000 by year 40 in our more conservative 8% portfolio, reflects the obvious fact that with doubling... Read more