Morningstar's president of fund research, Don Phillips, has mentioned that in the realm of indexing versus active fund management, extremists on either side of the debate routinely ignore legitimate data simply because it doesn't support their views. Lately, I've seen signs of the same absolutism in the realm of another great investing debate: whether to manage a portfolio for income or total return. Even a hint of an endorsement for the total-return approach seems to set off the income absolutists. This is frustrating because when you take the time to examine the two approaches, it's clear that they're not polar opposites at all.

For starters, no one's saying income generation shouldn't be a key goal for every investor; it is, after all, one of two key components of the total-return equation. (The other, obviously, is price appreciation.) So when I recommend a total-return approach, I'm not saying to gorge yourself exclusively on securities with growth potential but no ability to "show investors the money."

Income producers--whether bonds or dividend-paying stocks--should clearly be an important component of every investor's toolkit. They should also, arguably, grow in importance as a percentage of our portfolios as we age: Focusing on securities with the ability to pay income adds a valuable quality overlay to a portfolio, as income production can be an important show of an entity's financial wherewithal. From a practical standpoint, income can also provide a cushion on the downside when the market is falling.