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Dear Mr. Berko:

Dear N.W.:

I don’t like the Canadian energy stocks for a very simple reason. Most have taken in substantial investment capital for exploration based upon oil trading at $100 to $120 a barrel. Now that oil is trading at $40 to $45, those firms will be hard-pressed to meet their promised returns. Even Venezuela, Mexico and some of the oil emirates are feeling the pinch. They borrowed billions for pipelines, drilling equipment and infrastructure predicated on oil selling at $120 a barrel, and their investors are sweating. That makes me feel warm and fuzzy inside.

It’s an understatement to say, “This is a tough market.” It’s also a volatile market. I believe we can expect lots of days when the Dow Jones industrial average gains or loses 400 or 500 points or more. However, I think the Dow might have reached its low when it touched the 7,400 level in November.

Consequently, there are some great issues in today’s market that could still move 15 percent to 25 percent lower. There also are some compelling stocks in today’s market that could have significantly less exposure. They are primarily income-oriented issues. I’m comfortable owning them at their current prices because they’ve fallen so far from their 12-month highs that any further downside should be cushioned by their high-dividend payout and relative dividend security. The following are some of my favorites:

Weingarten Realty Investors (WRI-$17.99) is the largest real estate investment trust on the New York Stock Exchange. WRI owns 415 properties in 23 states, including 335 neighborhood shopping centers and 80 industrial properties. WRI is extremely diversified and the largest of its 5,500 tenants contributes only 2.8 percent of its revenues. WRI recently traded as high as $40 and I believe the $2.10 dividend, yielding 11.7 percent, may be reduced.

Crosstex Energy Inc. (XTXI-$2.19) traded in the high $30s during the past 12 months and recently lowered its dividend from 38 cents to 32 cents a quarter. The current $1.28 dividend yields 58.4 percent. XTXI connects wells of natural gas producers to its gathering system to purchase production. It then processes the natural gas for resale to utilities and other users. I think the reduced dividend is secure.

Gladstone Capital Corp. (GLAD-$6.79) is a business development company that earns high income by investing in debt securities like senior subordinated notes of established private businesses that are backed by leveraged buyout funds or venture capital funds. GLAD, which traded as high as $20 in the past year, pays a $1.68 dividend, which yields 24.7 percent.

Duke Realty Corp. (DRE-$8.89) is a real estate investment trust with 144 million rentable square feet in 24 major cities. DRE controls 7,100 acres of land potentially representing another 107 million square feet of future development. The outlook for 2009 isn’t sanguine. Most on Wall Street believe the $1.94 dividend, which yields 21.8 percent, might not be secure.

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