Dear Mr. Berko:

I have $185,000 in a fixed annuity with a large insurance company, and it matures two months from now. I will call the company when it matures and have them send me a check, and I want to invest $85,000 in a stock portfolio that yields 6.5 percent. So could you recommend about eight different issues that can give me a 6.5 percent return? I intend to invest the remaining $100,000 in a equitable variable annuity that guarantees 6 percent that you spoke about.

D.E., Port Charlotte, Fla.

Dear D.E.:

Don’t wait until your annuity matures before you ask for your money. Getting your $185,000 from that insurance company could take as long as four to eight weeks. And the good folks at your insurer’s home office may take their sweet time sending you that big check. Do you know why? Because of “the float.”

That insurance company makes a lot of money delaying payment on the $185,000 it owes you, because it uses that delay to invest your money for its own account at 5 percent or 6 percent. Basically your money just “floats” in limbo earning 6 percent that falls to the insurer’s bottom line rather than yours. That comes to about $31 a day for every day it delays sending you a check. If six weeks pass, the insurer can earn more than $1,500 on the float. Ain’t that sweet?

Here’s how to avoid this problem. About six weeks prior to the annuity’s maturity date, write to the company and say that your fixed annuity is maturing and that you want them to send every form necessary to transfer this money to your IRA. It will take those lovely and kind people about two weeks to post the paperwork to you. After you’ve signed and returned all the correct papers to them, it will take those delightful folks about two weeks to process your forms. After processing the forms, they’ll send your request to the accounts payable people, who will wait until your policy matures. Then the insurer’s accounts payable people will dawdle around for a week after your policy matures before posting a check.

Frankly, it’s almost impossible to get a check from an insurance company on the day or even the day after your policy matures. “Float income” is uncommonly important to most insurers!

When you get your money, I think you should buy the following seven securities. These issues should provide you with a current dividend yield that is more than 7 percent. It’s possible that some of these dividends might increase or decrease during the coming years. It’s also possible that the market values of some of these issues might be higher or lower in the future.

American Capital Strategies Ltd. (ACAS-$34.74) provides financial advisory services and investment capital to medium-sized companies. ACAS provides money for mezzanine financing, employee and management buyouts, and funding for growth, new inventory and equipment. The $3.16 dividend has been increased in each of the past four years and yields 9.1 percent.

Prospect Energy Corp. (PSEC-$15.40) lends money to and invests in small and thinly traded energy companies. The $1.12 dividend yields 7.3 percent and the shares have Thomson Financial’s strongest “buy” rating.

DNP Select Income Fund Inc. (DNP-$10.75) is a closed-end diversified management company. Its portfolio consists of fixed and equity income securities in the electric, telecommunications, utility and gas sectors. The 78-cent dividend yields 7.3 percent.

First Trust/Fiduciary Asset Management Covered Call Fund (FFA-$18) is a closed-end fund that invests in the tech, finance and consumer products sectors and writes call options on these companies. The $1.60 dividend yields 8.9 percent.

Lucent Technologies 7.75 percent Convertible Preferred (LUTHP-$964), backed by the famous Bell Labs, designs and sells systems, services and software to help companies manage their networks and create new revenue-generating services. This convertible has a current yield of 8.0 percent.

TEPPCO Partners L.P. (TPP-$38.65) owns one of the largest pipelines of refined petroleum-based products and liquid gases in the United States. Its current $2.70 dividend, which yields 7.0 percent, has been increased in each of the past 15 years. Value Line indicates that TPP can provide “worthwhile total-return potential out to 2008-10.”

Capitol Federal Financial (CFFN-$32.54) owns 36 banks in Kansas and is the state’s leading mortgage lender. CFFN’s regular $2 dividend is augmented by the board’s annual payment of 25 percent of its remaining net profits to the shareholders. In 2005 that was 28 cents a share. So the $2.28 dividend has a current yield of 7.0 percent.

I believe these seven issues will do well for you, but keep watching this column for new ideas. I, as well as many of our managed accounts, may own shares in these issues.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.

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