THE FLY HIGH INVESTING PROCESS

Why We Use Income‑Mandated Companies

Our portfolio is built entirely from Real Estate Investment Trusts (REITs), Business Development Companies (BDCs), and other Regulated Investment Companies (RICs). These structures are required by federal law to distribute at least ninety percent of their taxable income to shareholders, which allows more of their earnings to flow directly to investors rather than being lost to corporate income tax. This income‑mandated structure creates enormous intrinsic value because intrinsic value is defined by the earnings a company passes on to shareholders. For example, the S&P 500 has a current dividend yield of less than 1.1%, meaning it has almost no intrinsic value. In contrast, the Fly High Investing portfolio has a consolidated dividend yield greater than 13% — more than twelve times the intrinsic value of the S&P 500.

Another reason we focus on income‑mandated companies is because income‑mandated companies operate under strict federal oversight. REITs must follow statutory rules governing asset composition, income sources, and distribution requirements. RICs, which includes BDCs, must meet diversification standards, borrowing limits, and independent custody requirements under the Investment Company Act of 1940. Both structures are managed with a fiduciary duty to shareholders, a level of accountability traditional corporations are not required to provide. This framework, coupled with the enormous intrinsic value of the companies in the Fly High Investing portfolio, supports consistent earnings and reliable dividends, which is the foundation of sustainable passive income.

How We Evaluate Dividend Sustainability

To evaluate dividend sustainability, we use a balanced, four‑quarter view that gives equal weight to recent earnings and forward‑looking analyst estimates. This approach avoids backward‑looking bias, prevents overreliance on distant projections, and focuses on the near‑term earnings power that actually supports dividends. It allows us to identify companies with sustainable income and avoid yield traps that can mislead investors who rely on outdated or incomplete information.

How We Select and Maintain the Portfolio

Our selection process begins by screening the entire universe of income‑mandated companies. From this group, we identify the top fifty that meet our standards for earnings strength, dividend coverage, and stability of distributable cash flow. We cross‑check company results against independent data sources to ensure accuracy. The portfolio is monitored daily for developments that could affect earnings or dividend integrity, and every earnings release is reviewed to confirm ongoing qualification. Any company that no longer meets our standards is replaced by one that does, ensuring the portfolio remains aligned with our income‑focused philosophy.

Why No Fund Can Replicate Our Strategy

No fund in the market follows the methodology we use. Active income funds may select their holdings, but they still operate within broad mandates that include low‑yield positions and companies that are not required to distribute ninety percent of their earnings. Index products are even more constrained, forced to hold every stock in their benchmark regardless of earnings strength or dividend safety. Our approach is fundamentally different. We focus exclusively on income‑mandated companies and further screen for high‑yield dividends supported by distributable earnings, the only sustainable source of reliable passive income. This combination does not exist in any ETF, mutual fund, or institutional strategy, which is why our portfolio delivers a level of income traditional funds cannot match.

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