Dear Mr. Berko: 

I’m 68, and my wife is 66. I’ve worked as a diesel mechanic for 42 years, and my wife was head of our church’s religious school from 1997 until last year. I still work two days a week because we need the extra money, and my wife also works two days a week for cash. We raised three children, who are on their own. Our home is paid for. We have no debts. We don’t have retirement accounts, but together we get $2,380 from Social Security. We have always been savers and have accumulated $231,000 in savings accounts and certificates of deposit. Is there any way we could get 4 or 5 percent on $100,000 if we invested it in a low-risk way? An upstanding gentleman, who is a dedicated member of our church, told us about an investment he calls “low-risk mortgage units on high-value income properties.” He says the mortgage unit pays 12 percent annually and recommended that we begin with a $100,000 investment, which would give us $1,000 a month. The attachments explain this investment, which we don’t understand. We would appreciate your advice. C.W., Durham, N.C.


Dear C.W.: 

What unmedicated gall! No credit card debts, home mortgage or auto loans. Your kids are gainfully employed. You have more than $200,000 in the bank and live within your means. I don’t mean to cast asparagus on you folks, but people such as you are ruining our economy! You’re un-American!        

A church is a wonderful place to worship, socialize and meet friends. A church is also a wonderful place for an “upstanding” gentleman to persuade some upstanding members to purchase investments that won’t stand up to scrutiny. These “low-risk mortgage units on high-value income properties” have a faint whiff of familiarity. About four years ago, a churchgoer and reader of mine in Oklahoma asked about a similarly worded investment that paid 16 percent. And it seems that an upstanding, dedicated church member did not stand too tall with the Oklahoma Department of Securities. I can’t say with certainty that this man is the same grifter. But the terms and language of the offering are almost identical, and this whiff is beginning to stink like Ponzi to me. I suggest that you tell this upstanding man to stand down.        

It’s still possible to earn a 5 percent or better current return with high-quality common stocks. GlaxoSmithKline PLC (GSK-$50.60), a hugely profitable international pharmaceutical company, yields 4.3 percent. Kinder Morgan Energy Partners LP (KMP-$82.15) is a $10 billion-revenue master limited partnership that pays a 6.3 percent dividend. AT&T Inc. (T-$35.26) needs no introduction, and the shares pay 5.1 percent.        

Energy Transfer Partners LP (ETP-$48.09) is in the natural gas midstream, interstate and transportation storage business. This $25 billion master limited partnership company yields 7.4 percent. Reynolds American Inc. (RAI-$48.09) – which makes Kool, Winston and Camel cigarettes – yields 5.2 percent. Old Republic International Corp. (ORI-$12.96) is a 125-year-old commercial insurance company and pays a 5.6 percent dividend. Vodafone Group PLC (VOD-$28.88), with 451 million cellphone customers, pays twice a year and yields 7.1 percent. Total SA (TOT-$49.73), a multibillion-dollar international oil company, has a 5.5 percent dividend yield. BCE Inc. (BCE-$44.01), the largest telephone company in Canada, has a 5.1 percent yield. W.P. Carey Inc. (WPC-$64.95) is a global real estate investment trust investing in commercial properties, and it yields 5.1 percent. Finally, visit your credit union to inquire about a reverse-annuity mortgage (RAM). If your home is worth $150,000, a RAM could bring you in about $600 a month tax-free.        

The majority of these 10 issues are likely to increase their annual dividends at least a half-dozen times during the coming 10 years. Yes, when the stock market declines, these stocks will decline in value, and when the market rises, these issues may rise with it. But there is a high degree of probability that the dividends of these issues will not be reduced when the market declines. And during the coming 10-year time frame, there is also a good probability that the combined dividends will grow between 25 and 50 percent.