My Augmented Income Strategy (AIS) is an income‑first screening layer that seeks and identifies securities whose dividend yields exceed my chosen high‑yield savings account (HYSA), the benchmark for inclusion. AIS is intentionally simple at the first pass: it flags names that pay materially more than the HYSA so I can prioritize further fundamental review, tax treatment considerations, and liquidity metrics (Position sizing).
By concentrating on securities within the AIS, that yield meaningfully above my HYSA, I apply a disciplined buy‑hold‑acquire‑more posture, AIS aims to generate steady cash flow while selectively adding to positions when market stress creates attractive entry yields.
Qualified vs Non‑Qualified Dividends — Tax Treatment
A critical distinction for income investors is whether dividends are qualified or non‑qualified. Qualified dividends are taxed at long‑term capital gains rates and generally require meeting holding‑period rules and originating from qualifying corporations. Non‑qualified dividends are taxed at ordinary income rates and commonly include distributions from REITs, many ETFs, and certain foreign payers. The AIS bucket contains both types of distributions, so after‑tax income will vary across holdings and account wrappers. Tax planning and account placement (taxable vs tax‑advantaged) should be part of any decision to hold or add to these positions.
Acquiring shares can/should be... systematic: an investor might add on a percentage decline in price, by using a volatility‑aware trigger such as a 30‑day standard deviation band (I use these), or follow a planned dollar‑cost averaging approach through broker tools like E‑Trade’s Automatic Investment Plans (AIP). AIPs might let investors allocate fixed amounts on a schedule, often buying fractional or partial shares where supported, which helps translate a target dollar commitment into incremental ownership aligned with the Investors goals. Be aware platforms typically impose minimums and limit which securities are eligible for AIP or fractional purchases, so check the broker’s rules and match the method to your risk tolerance, tax situation, and time horizon.
How I Use AIS; My Process Notes
- First‑layer screen: AIS begins with a yield screen versus my HYSA. This is a starting point, not a final buy signal.
- Buy‑hold‑acquire more: My default posture, in this strategy and this strategy alone, is to hold for income and add on meaningful weakness when fundamentals permit. I'm not likely selling my shares, once acquired, EVER. These are a buy and hold Investment in my IRA's and Personal/Joint Accounts.
- Discounts and distress: Some tickers trade at discounted prices that inflate yield because the business is under stress; higher yield can compensate for risk but is not a substitute for due diligence. I look carefully at higher yields to the competition in the Sector.
- Tax planning: Because AIS mixes qualified and non‑qualified dividends, consider account placement and maybe consult a tax advisor about holding periods and tax efficiency. Impact varies by the individual and account type.
My Current AIS Candidates: Currently Trading Below 30‑ and 90‑Day Averages
These tickers currently trigger three of my measures. They are trading below both the 30‑ and 90‑day averages and yield more than my HYSA, the Income Benchmark. The list may present, to me, add‑on opportunities after further and deeper analysis supports their Purchases.
| Ticker | Yield (%) |
|---|---|
| AMH | 4.52 |
| BKLN | 6.34 |
| CPB | 5.77 |
| ETD | 6.75 |
| FTF | 12.12 |
| GIS | 5.42 |
| HPQ | 6.51 |
| OBDC | 12.71 |
| PAYX | 4.86 |
| PRU | 5.59 |
| QSR | 3.81 |
| QYLD | 12.18 |
| SCM | 13.17 |
| TFC | 4.19 |
| TROW | 5.54 |
| WEN | 7.27 |
My other AIS Candidates: Now Trading Above 30‑ and 90‑Day Averages
These names also yield more than my HYSA and are trading above their short‑ and medium‑term averages, indicating recent strength. They are more likely, from my experiences, to become core income holdings rather than immediate add targets because I feel/sense a turnaround.
| Ticker | Yield (%) |
|---|---|
| AMCR | 5.15 |
| AVA | 4.63 |
| BGS | 14.34 |
| BMY | 4.08 |
| CAG | 7.33 |
| CALM | 3.41 |
| CCI | 3.96 |
| CMCSA | 4.20 |
| CUBE | 5.34 |
| CVX | 3.84 |
| D | 4.21 |
| EIX | 4.70 |
| EPD | 6.10 |
| EQR | 4.36 |
| EXR | 3.69 |
| F | 4.23 |
| HRL | 4.59 |
| KHC | 6.48 |
| KMI | 3.60 |
| LQD | 4.69 |
| MO | 6.17 |
| MSM | 3.71 |
| NHI | 4.13 |
| NNN | 5.42 |
| NWE | 3.82 |
| OHI | 5.68 |
Execution, Risk Management, and Notes
- AIS is a first‑layer screen only; further fundamental and balance‑sheet analysis is required before increasing exposure.
- High yields caused by price declines can be attractive entry points but often signal elevated business risk.
- I often place high‑tax distributions in tax‑advantaged accounts when appropriate.
- Position size to reflect conviction, diversification needs, and downside risk.
How I process these two sides of, "Averages"
I think opportunity exists on both sides of the averages. Equities trading below their short‑ and medium‑term averages often signal that the market has “cold feet.” Other investors may be hesitant, there could be company‑specific concerns, or broader macro risks might be getting priced in. In contrast, those trading above their averages tend to show relative favoritism and are being sought by other investors and institutions, which can reflect momentum, improving fundamentals, or simply stronger demand. This is my opinion and not meant to be persuasive. There are also names that sit somewhere in the middle... not deeply discounted... not rallying... steady enough at producing income to keep accumulating. Below average, there may be a turnaround story developing, while above average is often where I like to jump onboard the ship and ride the strength.
Disclaimer: This post documents my personal Augmented Income Strategy and the current AIS candidates or holdings as a record of my process. It is educational and informational only and does not constitute investment, tax, or legal advice. Always perform your own research or consult a licensed professional before making investment decisions.
