Higher interest rates have created more income opportunities after years of low rates. Morningstar researchers stress the importance of identifying resilient income sources in a market with risks like inflation and high stock valuations. Dominic Pappalardo, chief multi-asset strategist, discusses where to look for income opportunities in 2026, including bonds, emerging-market debt, and local-currency sovereign bonds.

Morningstar researchers suggest diversifying income sources in 2026 to maintain stability and generate consistent income. High-yield credit yields were near 6.7% in December 2025, but spreads have tightened, leading researchers to prefer local-currency emerging-market debt. Investors should prepare for what’s ahead by exploring various investment opportunities beyond traditional options like the Magnificent Seven.

The 2026 Outlook from Morningstar highlights the impact of a weaker US dollar on investors. Chief European Market Strategist Michael Field discusses attractive regions like Europe and Brazil, emphasizing the undervalued sectors in these areas. The key takeaway is to balance risk and reward to create a resilient income stream in the current market environment.

Read more at Morningstar: How to Generate Steady Income in 2026: Bonds, REITs, and More