The strategy of diversifying your portfolio—spreading your investments across stocks, bonds, and other assets—has always been a main principle of safe, long-term investing. And income-yielding investments, including bonds and high-dividend stocks, have played a particularly big role in that strategy, because the income they generate can help inject a bit of growth into your portfolio, even when asset prices are sinking.

But the market crises prompted by the coronavirus pandemic are putting this basic tenet of investing to the test. The sheer velocity of the market’s decline—the S&P 500 fell 31% in a month’s time from late February through late March—could scarcely be mitigated by dividends. And as demand for bonds rose, U.S. Treasury yields reached all-time lows, while the Federal Reserve reduced interest rates to zero, making bonds less likely to provide much income benefit to new buyers.

While the market has stabilized in recent weeks, much remains uncertain about the long-term economic fallout—and initial forecasts aren’t exactly upbeat.

The upshot of all this is that for those seeking income from their investments, the options have become more limited. On the plus side, many of your income choices have now gone on sale, if you have an appetite for risk.

Hunting for the right dividends

Falling interest rates often go hand in hand with economic uncertainty, and that has certainly been true since the beginning of this year. And falling rates are usually good news for companies that pay hefty dividends.

In a recent study, research firm Morningstar found that large-cap stocks with stable cash flows often lag during stock-market booms. But they usually get a boost when interest rates fall, according to the report. Large firms take pride in the longevity and growth of their payouts, and they’re not likely to cut their dividend unless they're up against a wall.

Still, in a crisis like this, not all dividend stocks are created equal. The math of an individual company’s dividend can look deceptively large when share prices plummet, since a falling share price means a higher yield (you calculate yield by dividing the dividend per share by the stock price per share). And when companies get badly pinched, they sometimes cut or suspend their dividends. (So far in 2020, more than 30 companies in the S&P 500 have either reduced or suspended their dividend payout; General Motors announced a dividend-suspension Monday morning.)

So which dividend-paying stocks appear to be stable right now? Utilities look relatively secure, and so do consumer non-durable goods—think consumer-products giants like Procter & Gamble and food and beverage makers like Kraft Heinz, Kellogg, and Molson Coors. Morningstar’s research suggests that those sectors also outperform in a falling-interest-rate environment.

If you’re moving towards safer dividend payers, make sure not to overlook the stock returns, warns Adam Grealish, director of investing for robo-advisor Betterment. Dividends have accounted for only a bit more than 20% of total returns in the market since 2011, according to research from Thornburg Investment Management. If a company’s stock price was going nowhere before the recent crash, in other words, its dividend alone may not make it worth scooping up.

Still, for dividend-hunters, there’s one upside to the recent volatility. “Prices are depressed,” says Steven Frazier, president of Frazier Investment Management. It gives you an opportunity to grab highly rated companies that were “really expensive last year,” he adds.

Frazier’s point is illustrated by the ProShares S&P 500 Dividend Aristocrats ETF (ticker: NOBL), which is down about 18% for the year to date, compared to about 13% for the S&P 500. That underperforance may reflect short-term panic rather than long-term prospects of the stocks in the ETF: NOBL tracks companies that have grown dividends every year for the past 25 years, even during downturns.

The corporate-bond balancing act

With ultrasafe Treasuries yielding ever less income, revenue seeking investors are eyeing riskier investments.

But with so many businesses’ futures in jeopardy, it’s no time to escape into the riskiest of bond groups—high-yielding “junk” bonds. Instead, Frazier is eyeing the investment-grade corporate bond space as the only risk worth taking. These bonds aren’t as safe as they’d normally be, since the coronavirus is impacting the ability of some companies to pay their debt. Still, as long as the U.S. economy survives this scare, even in diminished form, most companies in the space will continue to repay their loans.

The ICE BofAML US Corporate Master Index, which tracks investment grade corporate debt, currently sports a 3% effective yield. Various low-cost ETFs track investment-grade corporate bonds.

Safe as houses

Investors pessimistic about more liquid investments may want to consider investing in a more traditional income-generator: rental property. Real estate is a “nice diversifier” that’s relatively free of the current market issues, notes Frazier. And 30-year fixed mortgage rates, which averaged well over 4% last summer, averaged just 3.33% last week, according to Freddie Mac, close to an all-time low.

To be sure, a coronavirus lockdown is no time to shop for a property—and an economic downturn is a risky time to buy one. But if stock and bond markets remain choppy, the security of incoming rent checks may look very attractive by comparison.