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Potential Investment Thoughts – May 2016

This post is about potential investments, but first I wanted to address the topic of passive index investments. We have taken some amusing heat, and received some hilarious comments/emails, surrounding our intention to transition a portion of our portfolio to include a larger percentage of passive index equity investments. (Click this link if you want to read about our proposed portfolio allocation.) First, we were teased by readers who thought we were abandoning our dividend growth investing roots. Dividend growth investing is (and always has been) PART of our portfolio, but it is not our sole methodology. Currently, many companies that fall into this group are so astronomically expensive that I would not buy them with your money. (You read that right, not only wouldn’t we buy them with our capital…. but we wouldn’t buy them with yours.) So should we blindly purchase expensive shares, which in my opinion offer poor future returns, just because we previously bought shares in those companies at grossly lower prices? I think not. We will search for other opportunities that offer better value, and wait for those opportunities to materialize. Then, we got another round of comments/emails when we published an article talking about how we wanted to add a couple of Vanguard index ETFs to the core of our portfolio. What can I say, there are a few advantages to investing through passive index funds… and we would like to capitalize on those. As part of this transition, we looked at our investments and determined which ones had the potential to be our “long term holdings”…. and then began selling off the ones that didn’t make the cut. Which takes us to today, except that we haven’t invested very much of the free capital that resulted. So now we are starting to get comments/emails about why we haven’t redeployed all of that capital into the Vanguard index ETFs we specified. The reason is simple, it’s all about price and value. We see the risk/reward balance of most global equity markets being slanted heavily against us. To put it another way, I feel we would be risking a lot in order to potentially gain a little . There are plenty of indicators that suggest the bull market in equities is already over, and we are not going to risk a large amount of our hard-earned capital in order to potentially gain at best a small return. (I am not going to waste your time recounting those indicators today. We each believe what we choose to believe.) Playing to our advantages listed above, that is our prerogative. Unfortunately, many passive index investors are new to passive index investing… and don’t realize that passive index investments can and do decline in value along with their benchmark index. Plus, there are issues with what exactly you are buying… when you buy a capitalization weighted index fund. I predict this will be a hard lesson for them. (I am also humble enough to recognize that I could be wrong.) It probably won’t be a big deal if they don’t panic and sell… but heaven help them if they do. In summary, we have freed up the majority of the capital we intend to… as a result of culling the individual stock holdings that didn’t meet our “long-term holding” criteria. We have not redeployed much of that capital into passive index investments yet, because of the reasons discussed above. We always strive to recognize the things we can control and the things we can’t. This concept is a large part of while this blog has the name it does. In surfing, you have to wait patiently for the ocean to offer up quality waves… then it’s up to you to do something with them . We can’t control the waves we are offered, only what we do with them. Sounds a little bit like investing, doesn’t it? While valuation/price keeps us from buying passive investment at the moment, we see some pockets of opportunity on the horizon. Below are my personal thoughts: Courtesy of Wikipedia Berkshire Hathaway (NYSE: BRK.A ) (NYSE: BRK.B ) – It feels odd to me, to be considering this well-known behemoth at the moment. That being said, Berkshire’s “old world” businesses have reduced company profits recently and along with them… suffered from reduced investor sentiment. Dampening the outlook for the company, Buffett spent quite a while talking about the headwinds facing both the railroad and insurance industries at the Recent Annual Shareholder Meeting . That being said, Berkshire probably has the management team that is most likely to profit from a severe recession or stock market meltdown. Buffett/Munger have exploited market sell-offs several times in the past, and they have plenty of cash to put to work today. I am not a buyer today, with shares in the low $140 range. At this price, the company offers a trailing price to earnings ratio of 14.3, which is that is well below the broad S&P 500. I expect profits to decline again for 2016, and Buffett all but told us as much at the annual shareholder meeting. We will begin accumulating shares below $125, as I believe this level will provide a satisfactory return over the next 20 years…even when reduced profits in the near term are taken into account. Please note that I do not expect Berkshire to put up annualized returns as high as it has over the past 30 years, but I see this group of companies as a compounding machine whose structure allows management to reinvest earnings in an efficient way for decades to come. Slow, steady, and with fantastic free cash flow Also note, at the start of the year I said as much in Roadmap2Retire’s article on 2016 Investment Picks . Courtesy of NationalWesternLife.com National Western Life Group (NASDAQ: NWLI ) – Regular readers know that we have made several successful deep value swing trades in this company over the past two years. To recap, it is a small insurance company with high insider ownership, no debt, and a history of solid profitability. With a price to earnings ratio below 8 and Shiller price to earnings ratio below 9, we will continue to accumulate shares in this company. We do, however, recognize that given the company’s small market capitalization, share prices may swing wildly over the coming years. We’ll be patient, as always. Unfortunately, none of our long-term holdings are particularly close to levels where I would add to those positions. Wells Fargo (NYSE: WFC ) is probably the closest, but has quite a ways to fall before we start buying again. On the flip side, I see the prices that shares of most utility and consumer staples companies are currently trading… as absolute madness. I continue to believe prices have been bid up over the past few years as a result of bond investors buying these “bond proxies” for steady income. Companies like Procter & Gamble (NYSE: PG ) and Clorox (NYSE: CLX ) do pay a steady dividend… but between high debt levels… high price to earnings ratios… and pitiful earnings/revenues…these shares look particularly dangerous to me. In the coming months, I believe we will get a huge opportunity to invest in emerging markets. We added a few thousand dollars to our holdings in Vanguard’s Emerging Markets Index ETF (NYSEARCA: VWO ) earlier this year at $28.44. I continue to expect the emerging market equities to tumble significantly in the coming months…with the catalyst being currency exchange issues, global slowdown, bond market issues, etc. These are still assets we want to accumulate, and I expect their returns to be significant over the next 15 or 20 years. Courtesy of Wikipedia I am going to go out on another limb here, and talk for a second about real estate investment trusts. We hold a few shares of Vanguard’s REIT Index (NYSEARCA: VNQ ). We have no intention of adding to these shares in the near term. I am starting to see ominous headwinds developing for this asset class, however. While the last real estate crisis was spurred by single family homes, I believe the next one will be the result of two other subgroups. Commercial retail properties and apartment properties. In our part of west central Florida, there has been an apartment building boom for the last 6 years. The narrative went that all those apartments would be filled by all the people who were foreclosed on. Their credit was too poor or they were too scared to buy a home again…so they would rent. Fast forward a few years, and this narrative has overshot as these things often do. Cheap lending and reduced land prices allowed these projects to get off the ground…and they are still being built…but vacancy rates are falling as the finished apartment units are coming online. I suspect rents in my area will begin to contract, which will be the last indicator that some of these projects will default on their debt. I believe the other issue will come in the form of retail commercial properties. It’s been well documented, since at least the mid-1990s, that the United States has more “bricks and mortar” retail properties than any other nation in the world. Over the last few years, we have also seen two huge retail trends. 1) Consumers are spending less money than they used to, and 2) When consumers are shopping… a higher percentage of those sales are taking place online. Americans love their retail, I know it… believe me. I worked as a commercial developer in Florida for a couple of years, and represented developers in Florida for another 8 years. Low interest rates and banks being desperate to lend out their capital has allowed a massive building boom. I’m not saying all American retail is doomed, but there are a lot of lower quality locations out there… which have barely been hanging on. I expect them, maybe 25% or 30% of the total aggregate, to give up the ghost over the next 5 years. If you need a data point to indicate that bricks and mortar retailers are suffering, look no further than their terrible earnings over the last couple of quarters. Please take my thoughts with a grain of salt. All real estate is local, but I noticed similar trends all across the country on our recent (nearly) 10-Week Roadtrip . Some areas like Denver, Colorado, have such an influx of residents that I’m sure they can absorb the new capacity. Many other areas (like our part of Florida or Central Indiana) are in for some pain. Where are you finding value in equity and fixed income markets, currently? What trends do you see developing? Disclosure: We are long WFC, NWLI, VWO. This article is for informational purposes only and should not be considered a recommendation for anyone to buy, sell, or hold any equities. Please do your own research. I am not a financial professional. The information above is provided by Yahoo Finance and Morningstar.com.

Consolidated Water’s (CWCO) CEO Rick McTaggart on Q1 2016 Results – Earnings Call Transcript

Consolidated Water Co. Ltd. (NASDAQ: CWCO ) Q1 2016 Earnings Conference Call May 11, 2016, 11:00 am ET Executives Rick McTaggart – CEO & President David Sasnett – CFO Analysts Michael Gaugler – Janney Montgomery Scott Gerry Sweeney – ROTH Capital Blake Todd – Two Oaks Management John Bair – Ascend Wealth Advisors Operator Good morning, and welcome to the Consolidated Water Company’s First Quarter 2016 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. The information that will be provided in this conference call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Including but not limited to statements regarding the company’s future revenues, future plans, objectives, expectations, and events, assumptions, and estimates. Forward-looking statements can be identified by use of the word or phrases well, likely result, are expected to, will continue, estimate, project, potential, belief, plan, anticipate, expect, intend, or similar expressions and variations of such words. Statements that are not historical facts are based on the company’s current expectations, beliefs, assumptions, estimates, forecasts, and projections for its business and the industry and markets related to its business. Any forward-looking statements made during this conference call are not guarantees of future performance and involves certain risks, uncertainties, and assumptions which are difficult to predict. Actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Important factors which may affect these actual outcomes and results include without limitation tourism and weather conditions in the areas the company serves, the economies of the U.S. and other countries in which the company conducts business, the company’s relationships with the government it serves, regulatory matters including resolution of the negotiations for the renewal of the company’s retail license on Grand Cayman. The company’s ability to successfully enter new markets including Mexico, Asia and the United States and other factors including those Risk Factors set forth under Part one item 1a Risk Factors in the company’s Annual Report on Form 10-K. Any forward-looking statements made during this conference call speak as of today’s date. The company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements made during this conference call to reflect any change in its expectations with regard there to or any change in events. Conditions or circumstances on which any forward looking statement is based except as it may be required by law. I would now like to turn the conference over to Rick McTaggart, CEO and President. Please go ahead. Rick McTaggart Thank you, Gail. Good morning, ladies and gentlemen. Thank you for joining us today on this call, our CFO, David Sasnett is also joining me on the call from our Florida offices. Net income of the company this past quarter increased to approximately $2.05 million compared to $1.92 million during the first quarter of 2015. Consolidated gross profit during this past quarter was consistent with the first quarter of last year at approximately $6.1 million in spite of a decline of consolidated revenues of approximately $600,000 due to lower energy pass-through charges in January 2016 4.4% downward base rate adjustment in our retail business. This decline was partially offset by the addition of approximately six weeks in revenues from our newly acquired subsidiary Aerex Industries, Inc. which was purchased in mid-February. Other factors that impacted net income this past quarter were firstly an increase in general and administrative expenses of approximately $550,000. This was due primarily to legal costs related to the EWG litigation in Mexico and the United States and costs related to the acquisition of our 51% interest in Aerex. So just to keep in mind the cost of acquiring doing due-diligence that sort of thing were expensed this past quarter in relation to Aerex. And secondly, the impairment charge we recorded for our investment in our BBI affiliate as result of winding down of its Bar Bay contract decreased by $260,000 as compared to the first quarter of 2015. Our retail segment gross profit this past quarter remained consistent with first quarter of last year at approximately $3.35 million in spite of lower revenues due to lower energy pass-through charges and a base rate reduction noted earlier. These base rate reductions were partially offset by an increase in volume sales in our retail segment of approximately 5% during this past quarter compared to last year. Typically lower rainfall and higher tourism arrivals have tended in the past to increase our water volume sales in Grand Cayman. And according to the National Weather Service Data for this past quarter, rainfall was only about 60% of the rainfall that was recorded in the first quarter of 2015. Other tourist arrivals during the first quarter this year were down slightly by 2.45% compared to the first quarter of last year. So we tend to indicate that rainfall was the underlying cause of our — lower rainfalls the underlying cause of our retail segment performance. Earlier this year we noticed that our — sorry we received notice that our Cayman retail license have been extended to June 30 of this year to facilitate ongoing negotiations for a new license and we are currently waiting to receive the fully executed license amendment from the government. These ongoing negotiations continue to be productive and cordial. Gross profit generated by our bulk segment declined by $200,000 this past quarter compared to the first quarter of 2015 due to lower revenues of approximately $1.1 million. These lower revenues were due in part to a significant decrease in the prices of diesel fuel and electricity from 2015 to 2016 which reduced the energy component of our bulk rates and in addition to that, we noted in earlier filings that our fees that we charge for delivering water to the Water Authority from the North Sound plant in Grand Cayman decreased in the second quarter of last year due to contract extension that we received. This bulk segment gross profit decline was mainly attributable as I mentioned to our Bahamas and Grand Cayman bulk operations. While our belief is bulk operation gross profit this past quarter remain consistent with the first quarter of last year at approximately $315,000. Our service segment generated a gross profit of approximately $181,000 this past quarter compared to a loss of a $137,000 in the first quarter of 2015, and this is on higher revenues of approximately $650,000 due to our 51% acquisition of Aerex in mid-February of this year. On February 11, as we have noted we acquired a 51% interest in Aerex for approximately $7.7 million in cash. On April 28, we filed an amended Form 8-K which included the 2015 audited financial statements of Aerex as well as unaudited consolidated pro forma results of the company in Aerex for 2015. We are very excited about this acquisition which gives us access to the U.S. membrane water treatment equipment market and provides a platform to potentially expand our traditional design build operate water treatment business into the U.S. market. We’re already seen one large desalination plant in California completed under a design build operate contract and we are aware of others that are being considered in California and Texas. We believe that the current membrane water filtration market size of approximately $200 million in 2016 provides us with ample opportunity to expand the Aerex business using our more than 40 years of knowledge, designing, building, and operating this type of equipment. And in addition to that, as I mentioned, we see the added value of expanding our traditional build and operate business into the U.S. We’ve historically bought equipment ourselves from Aerex and its competitors and are therefore familiar with the competition from a customer perspective. And as a final comment, investors should keep in mind that due to the nature of Aerex’s business, we expect its revenues will fluctuate more than the revenues that we have historically generated under our long-term water supply contracts and utility license. Just looking at our projects, on April 21 of this year, we reached another significant milestone in the development of our 100 million gallon per day seawater desalination plant in Mexico with the submission to the State of Baja California of our binding tender offer to design, build and operate this plant for 37 years. We believe that our proposal is very competitive and it reflects our deep knowledge of a project that we have been developing for quite some time. The State of Baja California accepted two other proposals, in addition to ours, and intends to announce the results of its technical evaluation next Friday, on May 20, at which time the financial proposals of all the technically compliant bidders will be publically disclosed. So we will keep investors apprised of any developments regarding this very important project. So Gail, with that I would like to just open the call up for questions. Question-and-Answer Session Operator We will now begin the question-and-answer session. [Operator Instructions]. The first question comes from Michael Gaugler of Janney Montgomery Scott. Please go ahead. Michael Gaugler Good morning everyone. Rick McTaggart Hey Mike how are you? Michael Gaugler Good. Rick you mentioned that California and Texas as really the markets for Aerex on a go-forward basis. I’m just wondering would there be anything to preclude Aerex from befitting from Rosarito if you are ultimately selected as the developer of that project? Rick McTaggart Absolutely not I mean we definitely have that in mind. Michael Gaugler Okay. That was really all I had. Thanks. Rick McTaggart Thanks Mike. Operator Our next question comes from Gerry Sweeney of ROTH Capital. Please go ahead. Gerry Sweeney Hey good morning guys. Thank you for taking my call. Rick McTaggart Sure, Gerry. How are you? Gerry Sweeney Doing well, thanks Rick. A question on the bulk side, the revenue coming down, you talked specifically about just general reduced energy cost flowing through. How — I’m curious as to how volumes have been on that side of the business? Rick McTaggart Actually in Grand Cayman we saw a slight increase in volumes this past quarter in the Bahamas I think it’s been fairly consistent. We’ve mentioned over the last couple of years that the government there in the Bahamas has been — has undertaken a loss reduction program. So they’re staying around the minimum volumes now for that business. David Sasnett Gerry, I just wanted to add that volumes don’t have a huge impacts on our bulk business they are much more relevant to the retail side of our operations because our bulk contracts have minimum take or pay arrangements. So incremental volumes above the minimum probably contribute to gross profit don’t have the huge impact on gross profit. They don’t have the impact on gross profit let’s say an increase in volume has in the retail segment. Gerry Sweeney Got it, it’s a good point. Also I know you talked about I think in the Bahamas at some point they were trending down towards the take or pay level and there potentially could be some opportunity for the Bahamas government to expand some of that bulk business into other areas that may need water. I mean it was a little bit of a corporate ended statement but just curious if there was an opportunity on that front at all for the future? Rick McTaggart Well my understanding is that the government is interested in encouraging more people to connect. The actual connection rate in that side I think is quite low compared to other jurisdictions that we operate in. I don’t remember the exact percentages but I think it’s somewhere less than 50% in the households are connected to the public water supply there so. There is an opportunity to encourage people to connect to the more reliable source and there is a big development there that’s — the Bahamas development that and the government has its sights on supplying them as well but that I think it’s been in the news quite extensively that that project is having some issues itself so. Gerry Sweeney Got it. And then just a couple of quick housekeeping items. I assume energy cost impact stabilize, if not down back a little bit so, is it fair to say that we’re done with some of that energy pass-through declines? Rick McTaggart Well, you tell me, I don’t know how the energy market is going to go over the next year or so but I mean seems to me there is opportunity for it to go up. Gerry Sweeney Yes, I mean on a look back basis over the last quarter it seems to have stabilized so. Rick McTaggart Yes. Gerry Sweeney And then could you just go over that the G&A I think you mentioned it shift around by $550,000 it sounds like there was a couple puts and takes in their little less on the impairment charge but a little bit more on some of the other charges that gets around acquisition and some — wasn’t sure if there was something else. If you could just spend 30 seconds on that just so I think cost might be — David Sasnett You want me to take this Rick? Rick McTaggart Yes, you can do. You go ahead. David Sasnett Well, first of all we have the incremental G&A expenses from the Aerex acquisition for the six week period well they were included in our results. Then we also have the incremental expenses associated with the litigation in Mexico that was raised by EWG. And so, and then we had some acquisition cost and under current GAAP. The legal fees that you incurred and the accounting fees things like that and under previous accounting guidance you could capitalize this cost but years ago they changed the guidance, so all that stuff is expensed by us. So really those things the Aerex G&A increase obviously will be there going forward and they encourage general and administrative expenses that will be incorporated in our results through the rest of this year. With respect to the legal fees, we incurred with the Mexico I don’t know if we could predict how that will go. And then obviously we won’t have incremental expenses associated with the Aerex acquisition now that has been closed. So hopefully that’s helpful to you. Gerry Sweeney Yes and I mean what I was really trying to get out, what is baseline G&A, I mean what was the litigation cost and what were the acquisition cost provided from that? David Sasnett We disclosed if you’ll take a look in the 10-Q. Gerry Sweeney Yes. David Sasnett There is a discussion of the litigation both in the footnotes to the financials and is disclosed in the MD&A section and the exact amount of legal fees that we incurred for that litigation were disclosed therein. So you can take a look at that. Gerry Sweeney Okay, appreciated. Thank you. That’s all from my end. Rick McTaggart Thanks Gerry. Operator Our next call comes from — question comes from Blake Todd of Two Oaks Management. Please go ahead. Blake Todd Good morning guys. Rick McTaggart Good morning. How are you? Blake Todd Doing great. In your press release you talked about the proposal that you put to Mexico and there is three entities that you say that did it. And could you explain what those three different entities were that did the proposal? Rick McTaggart Yes, it’s public information I mean they ourselves obviously which it was a consortium consisting of NSCR well which is our subsidiary, Newwater which is a Singapore company and Degrémont — Suez Degrémont which is a one of the largest water companies in the world. So the three of us is consortium, the other group is essentially Hyflux out of Singapore and the third group is Aqualia out of Spain. Blake Todd And we know or have you will this be part of the disclosures when we get into the financial as to what percentage ownership each piece will have? Rick McTaggart Well, I mean what we’ve disclosed in the past is that we expect to make our long-term revenues through 15% equity interest in the project and/or less and service fees we’re providing operational services to the plant and the distribution and the pipeline there, so that’s as much as, as we can tell you at this point. I mean all the financials information is still undisclosed by the client or anything like that. So we don’t know what the rates are that the competitors have charged and we’re certainly not going to disclose ours right now. Blake Todd And then one last thing May 20, Mexico comes back and says these particular bids are technically feasible. I’m assuming that they will then ask for proposals from one or three of you for the financing; is that correct? Rick McTaggart That was all submitted on the 21 of April. So it was in two packages and they don’t open the financial package until they determine whether the proposal is technically compliant. Blake Todd Super. Thank you for the color. Rick McTaggart Sure. No problem. Operator [Operator Instructions]. Our next question comes from John Bair of Ascend Wealth Advisors. Please go ahead. John Bair Thank you. One of my questions was just answered; the other one is that you would kindly shed some light on what’s going on in Bali these days for you? Rick McTaggart David, do you want to take on that? David Sasnett Yes, things in Bali haven’t changed. The local economy is surely not doing very well there. And as a result, our sales volumes has actually declined in the first quarter this year as compared to first quarter last year. We’re in the process as we said at the moment, as we said in the Q; we’re trying to find a partner there. We still believe that the price — the markets has got a great potential. But at the moment we’d like to bring in a partner that would help us deal with the ongoing losses that we have and a party that could really market properly to the local hotels and to the government itself. So, I mean ultimately if we don’t find a partner we will have to take some kind of impairment charge against these assets and we’ve talked about that openly both in the Risk Factors of our Q and in the discussion in the retail segment the MD&A. But we think the project itself and the market have a lot of potential when we think it’s — it would be an attractive investment for some party and so we’re marketing it now and we’ll see how that goes. I can’t tell you that the entire Indonesian economy and also they’re approached to their water assets is somewhat confusing to us because when we first entered the Bali market years ago they had a water crisis at that time and it’s only grown worse and they continue to tap into the fresh water aqua for there and with long-term disaster results for them the government there seems almost unable to address the issue. So hopefully they will come around and realize the importance of desal, we have actually talked to the Water Utility there at times and they have been very interested in doing something with us but nothing seems to happen there. It’s always difficult reaching a deal with any government and it seems to be the more so in Bali. But like I said we still believe in the market and we’re hopeful that we could find a partner that would help us not only build out that plant but also grow the business there but we’ll just have to see how it goes. John Bair So if I’m hearing you correctly, you would still retain an interest in the project; is that correct? Rick McTaggart Yes. David Sasnett Yes the ideal situation for us would be to continue to remain a partner but to also use our expertise in the capital of our new partner to build additional plants and the entire Indonesian market needs desal is just getting them to pull the trigger on it, getting them to actually take actions seems to be the impediment there. Operator [Operator Instructions]. As there are no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Rick McTaggart for any closing remarks. Rick McTaggart Yes, thanks Gail. Just wanted to thank everybody again for joining today and look forward to speaking with you again in August to discuss our second quarter results. Thank you. Operator The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. 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You’ll Never Guess The Top-Performing Income Strategies Of 2016

There’s been a lot of drama surrounding financial markets during the first four months of 2016. By some measures, it was the worst start to the year ever for U.S. stocks. This was followed by a surprisingly robust recovery. But for all the painful turmoil, the S&P 500 is trading pretty much where it started the year. This flat performance also means many income strategies are outperforming stocks by a wide margin in 2016. Of course, income investments come in all shapes and sizes. You can invest in high-dividend stocks (both domestic and international), high-yield bonds, Real Estate Investment Trusts (REITs), Business Development Companies (BDCs), Master Limited Partnerships (MLPs) or even strategies that generate income by selling call options against the S&P 500. Over the long term, a mixture of these strategies is most prudent. After all, every strategy has its day. What works today won’t necessarily work tomorrow. Just ask any investor in MLPs, which have been hit unusually hard by the collapse of the energy sector. Looking across today’s landscape of income investments, there’s a new, hot sector in income-generating strategies. And I bet it’s one that you have not looked at in years. As I surveyed the top-performing, income-oriented investments for 2016, I was surprised to find that it was the much-derided international stock markets – or more specifically, emerging markets – that accounted for three out of the five top-performing income investment strategies that I track. The top-performing strategy invested in REITs, but it did so across the globe. With that, here are the… Top Performing Income ETFs in 2016 Global X Super Dividend REIT ETF (NASDAQ: SRET ) – 15.72% Gain The Global X SuperDividend REIT ETF invests in 30 of the highest dividend-yielding REITs globally. SRET invests in REITs from around the globe, which diversifies both geographic and interest rate exposure. Global REITs are having their day in the sun because housing shortages – exacerbated by lagging construction after the 2008 financial crisis – have combined with a recovering economy to boost demand for real estate. SRET yields a whopping 9.09% yield. SRET makes distributions on a monthly basis, providing a regular source of income for a portfolio. The fund’s total expense ratio is 0.58%. SRET has risen 12.34% so far this year. With dividends, SRET has generated a total return of 15.72% year to date. A word of warning: The total assets of this REIT are a mere $5.6 million, so you may run into wide bid-ask spreads or even liquidity issues with this one. ALPS Emerging Sector Dividend Dogs ETF (NYSEARCA: EDOG ) – 14.19% Gain The ALPS Emerging Sector Dividend Dogs ETF tracks a proprietary index comprised of the 500 largest stocks from middle-income emerging market countries. It then invests in the five highest-yielding securities (based on regular cash dividends) in each of the 10 Global Industry Classification Standard (GICS) sectors. EDOG yields 3.79%, and makes distributions on a quarterly basis. The fund’s total expense ratio is 0.60%. EDOG has risen 13.58% so far this year. With dividends, it has generated a total return of 14.19% year to date. Pimco Municipal Income Fund II (NYSE: PML ) – 12.29% Gain The PIMCO Municipal Income Fund II is an actively managed, highly leveraged municipal fund. The fund typically generates its large distribution by venturing down the credit spectrum into non-rated and junk-rated muni debt, focusing on the intermediate and long portions of the yield curve, then leveraging its holdings. Say the words “invest in municipal bonds,” and most investors can barely stifle a yawn. Yet, returns on municipal bonds have beaten the broader stock market in 2015 and are among the best-performing income investments over the past five years. That’s a surprise. After all, in 2012, major cities in the United States such as Detroit and San Bernardino, California, went bankrupt. Analyst Meredith Whitney grabbed headlines with her prediction that there would be between 50 and 100 “significant” municipal bond defaults in 2011, totaling “hundreds of billions” of dollars. Very little of this doom and gloom came to pass. PML yields 6.12%. PML has maintained a level income-only monthly distribution of $0.065 per share since 2007. PML has logged returns of an annualized 13.46% over the past five years. The fund’s total expense ratio is a relatively high 1.16%. PML has risen 9.99% so far this year and, with dividends, it has generated a total return of 12.29% year to date. EGShares Low Volatility Emerging Markets Dividend ETF (NYSEARCA: HILO ) – 9.49% Gain The EGShares Low Volatility Emerging Markets Dividend ETF tracks the EGAI Emerging Markets Quality Dividend Index. This is an equal-weighted index designed to represent a portfolio of approximately 50 companies in developing markets, each of which has a higher dividend yield than the average dividend yield in the EGAI Developing Markets Universe. The fund also seeks to capture dividend quality by screening for factors such as return on equity, positive earnings growth, maximum dividend yield and three-year dividend payment consistency. HILO yields 2.89%. HILO makes distributions on a quarterly basis. The fund’s total expense ratio is a relatively high 0.85%. HILO has risen 8.72% so far this year and, with dividends, it has generated a total return of 9.49% year to date. Global X SuperDividend Emerging Markets ETF (NYSEARCA: SDEM ) – 9.12% Gain The Global X SuperDividend Emerging Markets ETF invests in 50 of the highest dividend-yielding equities in emerging markets. Investing in high dividend-yielding securities in the emerging market space combines a value-oriented investment approach with exposure to markets that are expected to grow at a faster pace than developed markets. SDEM yields 6.89%. SDEM makes distributions on a monthly basis, providing a regular source of income for a portfolio. The fund’s total expense ratio is 0.65%. SDEM has risen 6.92% so far this year. With dividends, it has generated a total return of 9.12% year to date.