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What is The Income Factory?

What is Income Factory


The Income Factory™ is a philosophy, a strategy and an attitude. 

When Ford Motors builds a new automobile plant, nobody at Ford worries about what the plant's "market value" is from one day to the next. They worry about how many cars and trucks it produces, and how to grow that output constantly over time.

Income Factory™ investors take the same approach to their investment portfolio, concentrating on growing its "output" - i.e. the "river of cash" that it produces, day in and day out - instead of worrying about paper profits and losses that cause short-term angst, but have little impact on their long-term investing outcome. 

Income Factory™ investors create their own growth by re-investing and compounding the "river of cash" that their portfolios ("factories") produce. One attractive feature of an Income Factory™ is that the output, its river of cash, actually grows FASTER during downturns or flat markets than during periods when market prices are rising, because it is reinvesting and compounding at bargain prices and higher-than-normal yields.

This allows Income Factory™ investors to sleep soundly during market turbulence because they know their long-term income stream continues to grow steadily despite the short-term volatility in market prices.

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The Income Factory™ was developed by Steven Bavaria. A former reporter and financial executive, Bavaria writes about finance, economics and politics, drawing on his fifty years experience in international banking, credit, investment, journalism and public service. His latest book, "The Income Factory: An Investor's Guide to Consistent Lifetime Returns," will be released by McGraw Hill in late February 2020.

His earlier book "Too Greedy for Adam Smith: CEO Pay and the Demise of Capitalism" was inspired by his experience running human resources at the Bank of Boston, where he saw first-hand the excesses in the CEO pay arena.

Bavaria began his career at the Bank of Boston, handling international credit workouts that involved managing a fleet of ships, chasing a Vatican-owned bank in Switzerland, and leading the turnaround of troubled branches in Australia and Panama.

Later he worked at Standard & Poor's, where he introduced credit ratings to the leveraged loan market. In between Bank of Boston and S&P he was a reporter for Investment Dealers' Digest, Associate Commissioner of the Massachusetts Dept. of Mental Health, and worked briefly for Citibank. 

Bavaria graduated from Georgetown University and New England School of Law. He lives in Boca Raton, Florida and Norwalk, CT.

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Nuts and Bolts

The Nuts and Bolts

What does an Income Factory™ portfolio actually look like? What sort of assets does it hold to generate its “output,” i.e. its river of cash? 


The Income Factory™ is based on the idea that “math is math” and a 10% cash yield and a 0% market price appreciation equals the same 10% total return as a 0% cash yield and 10% market appreciation, or 5% and 5%, etc. An Income Factory™ strategy typically uses high yielding securities (bonds, loans, closed-end funds, master limited partnerships, business development company stocks, high dividend-paying utilities, etc.) where the cash income alone provides an 8-10% return that can be re-invested and compounded to produce long-term growth, making market price appreciation of the securities themselves un-necessary.


As a result, Income Factory™ investors don’t have to fear downturns and bear markets, or fixate on CNBC, Bloomberg, or Fox Business News coverage of the ups and downs of stock market indices. That’s because they are focused on building their portfolio’s income flow, and not on short-term movements in the portfolio’s value. 


Since the Income Factory™ investment strategy depends on the steady performance of a highly diversified portfolio of companies making their regular interest and dividend payments, rather than on picking stock market “winners” to outperform the economy and their competitors, it has been called “unheroic” investing rather than “heroic” investing. It has also been likened to going to a racetrack and “betting on horses to merely make it around the track and finish the race” as opposed to  “betting on horses to win the race, or at least place or show.” In other words, it is a much easier bet to win.

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endorsements for the income factory



The Income Factory shows that by shifting their focus from the fickle market’s ups and downs to the power of reinvesting and compounding income, investors can build their wealth abundantly while also sleeping well at night.

—MARTIN FRIDSON, CFA, Publisher,  Forbes/Fridson Income Securities Investor

A preeminent thought-leader in strategic income investing, Steve Bavaria inspires investors to break free of the financial industry’s obsession with market price and to focus on what really matters: growing an income stream. 

—KATHLEEN A. CORBET, Founder and Principal of Cross Ridge Capital, LLC

Steve is a visionary thinker who left his mark on Wall Street by creating a whole new category of credit ratings that helped transform the once sleepy leveraged loan market into a $1.3 trillion behemoth. The Income Factory is a must-read for investors who are looking to confidently generate investment income in today’s yield-starved world.

—STEVEN MILLER, Head of Leveraged Finance Intelligence At Fitch Solutions

Steven Bavaria’s Income Factory is a simple yet elegant approach for the average investor to leverage the magnificent power of compound interest—Albert Einstein’s eighth Wonder of the World. “He who understands it, earns it!”

—“STANFORD CHEMIST,” Founder and Publisher of CEF/ETF Income Laboratory on Seeking Alpha

Generating income from investment cash flows is an ancient concept, but it takes Steve Bavaria’s unique blend of market and journalistic experience to reimagine it. With wonderful clarity and logic, The Income Factory challenges market value convention, offering the “non-heroic” benefits of credit payment streams. A must-read in a volatile and uncertain investing world.

—RANDY SCHWIMMER, Head of Origination and Markets, Churchill Asset Management and Founder/Publisher, The Lead Left

Bavaria’s “plain talk” on credit investing empowers investors to produce high yield returns that are much easier to forecast than stock market moves.

—DIANE VAZZA, former Global Head of Fixed Income Research at Standard & Poor’s

Steve Bavaria’s The Income Factory explains how high-yield investments can be used to achieve stock-market returns as good or better than the usual price-focused strategies. Cash returns are more reliable than market price returns and can be reinvested to create your own growth by buying more assets. Steve’s plain-English explanations are a pleasure to read and easy to follow.

—DAVID VAN KNAPP, popular Seeking Alpha writer and author of eight e- books on Dividend Growth Investing

The Income Factory takes the historical perspective of Benjamin Graham, equating free cash flow to current distributions, with a goal of growing cash flow dramatically over time. When you focus on what the portfolio produces versus paper gains/losses, you see the benefits of this “river of cash” to meet return goals rather than increased prices alone. A simple yet profound way to build portfolios that can increase cash flow even in bear markets, while helping avoid panic selling. I hope EVERY investor takes the time to read and follow this book’s principles.

—JOHN COLE SCOTT, CFS, Chief Investment Officer at CEF Advisors, Founder of

Steve Bavaria’s The Income Factory describes how using high current cash yields to “create your own growth” through reinvestment and compounding is a more predictable way to build wealth than relying on “wishing, waiting, and hoping” the market will do it for you. I have long admired Steve’s straightforward ability to communicate. Read, enjoy, and prosper!

—KAREN VAN DE CASTLE, former Wall Street banker, consultant, and educator

Your book is an absolute MUST-READ for non-investment professionals. You are thoughtful, methodical, and not unnecessarily technical in telling people how to make money in the long run! Whatever you charge for the book will be a bargain for those who buy it and use its commonsense approach to investing.

—RICHARD W. THALER, Jr., Managing Partner, Lieutenant Island Partners

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