Don’t settle for lawyer’s investment advice
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Dear Mr. Berko:
I got a $51,000 settlement, with the help of my lawyer, from a back injury I sustained in a car accident. But, thank goodness, my back problems cleared up a few months later. There’s this new car I looked at, and the monthly payments would be $362 a month. I’m in debt up to my nose and have no savings, no Independent Retirement Account, but I do have a 401(k) worth $16,000. I’m willing to take some chances if I could get a 9 percent return to make my monthly payments. The lawyer who got me the settlement has a private “helping hand fund” that lends money to people who have no credit. He gets 20 percent to 30 percent interest, and he said if I invest my $51,000 with his fund, he would guarantee me 10 percent. Would this be safer than putting money in stocks or bonds to get 10 percent?
G.E., Cleveland
Dear G.E.:
It’s common knowledge that 90 percent of lawyers give the remaining 10 percent a bad name. How can this shyster charge such a high interest rate and avoid the usury laws? But lawyers, like members of Congress, are not held to the same ethical standards of behavior that govern the common man.
Though I believe your lawyer’s intentions are kind, honorable, compassionate and deserving of praise, I would by orders of magnitude be more comfortable investing that money in the following issues, each of which pays a dividend in excess of 9 percent.
Invest $10,000 in each of these five master limited partnerships.
Teppco Partners LP (TPP-$29.78) has $12 billion in revenues and owns and manages one of the largest pipelines for refined petroleum-based and liquid natural gas products in the United States. TPP’s $2.90 dividend, which may be raised to $3.20 in 2010, yields a sweet 9.7 percent. TPP has increased its dividend each year since 1991, and I believe the stock could trade between $45 and $50 in the next three years.
Enterprise Products Partners LP (EPD-$25.81) is a $23 billion revenue company that is an integrated provider of natural gas and natural gas liquids, fractionation, storage and transportation. This master limited partnership has a strong balance sheet, and its $2.15 dividend, which yields 8.3 percent, has been raised yearly since 1994.
Energy Transfer Partners LP (ETP-$42.37) gathers, stores, processes and transports natural gas, chiefly in Texas, via a 16,000-mile pipeline. The $3.58 dividend, which has been raised each year since the company founded in 2004, yields a swell 8.4 percent. Wall Street expects this $11 billion revenue company will raise the dividend next year to $4.10.
Buckeye Partners LP (BPL-$42.71) transports petroleum products (gasoline, jet fuel, distillates) and owns a number of storage facilities. The $3.60 dividend, raised each year since 1993, yields 8.4 percent and should increase to $3.80 in 2010.
TC Pipelines LP (TCLP-$35.48) owns more than 4,000 miles of pipeline that transports natural gas to Wisconsin, Michigan, Minnesota, Montana, Wyoming and the Dakotas. The $2.82 dividend yields 7.9 percent and has increased every year since the company’s inception in January 2000. The Street reckons TCLP’s revenues, earnings and dividend will increase this year and in 2010. The shares could trade in the mid-$40s within the next three years.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net. © Copley News Service
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