High yields available, but consider the risks
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I have just a bit over $100,000 that I can speculate with in the market. I want to buy a portfolio of issues that have yields of 10 percent or better. It’s my intention to hold these issues for a year, hoping that the dividend payouts will increase, and the share values will also increase. So please recommend several top-quality issues that have 10 percent or better yields. Please don’t suggest any closed-end bond funds, which don’t offer much opportunity for dividend and principal growth.
H.E., Elgin, Ill.
Dear H.E.:
You’re not asking for much! All you want are an assortment of “top-quality issues” that have 10 percent or better yields. High yields usually indicate low quality and high risk, not top quality. However, I can give you some of the best among some of the worst.
If you invest $9,000 in each issue, it might help if you spend the next 52 Sundays in the amen corner of your church, because you’re gonna need all the help you can get. However, you may want to ask yourself: What if Gentle Ben (Ben Bernanke, chairman of the Federal Reserve Board) decides to raise interest rates? If so, these high-yield issues could become a lot less attractive.
Harvest Energy Trust (HTE-$30.42) is a $2.1 billion revenue Canadian investment trust. Through its subsidiaries, HTE explores, develops, produces, refines and sells petroleum and natural gas liquids. Its monthly dividend of 33 cents yields 13 percent.
Provident Energy Trust (PVX-$12.16) is a $2 billion revenue Canadian investment trust that purchases, develops, produces, stores, processes, extracts and transports crude oil and natural gas. The $1.38 dividend yields 11.3 percent.
Telephonica de Argentina SA (TAR-$18.25) is a $1.2 billion telecommunications company providing telecommunications services in Argentina. The $1.97 dividend yields 10.8 percent.
Enerplus Resources Fund (ERF-$46.54) is a $1.35 billion revenue Canadian investment trust that owns a diversified portfolio of diversified oil and gas properties in Canada and the U.S. The $4.80 dividend yields 10.3 percent.
Alpine Total Dynamic Dividend Fund (AOD-$20.35) is a closed-end fund that scours the globe seeking high-yield foreign and U.S. stocks without regard to the dividend’s tax rate. This $3.6 billion portfolio has an annualized $2.16 dividend and yields 10.6 percent.
Korea Fund (KF-$44.90) pays a $7.12 annual dividend and yields 15.9 percent. This fund invests primarily in South Korean issues; concerns about North Korea’s belligerence weigh heavily on the Korea Fund’s net asset value.
Alesco Financial Inc. (AFN-$6.82) is a $42 million revenue real estate investment trust that invests in land, mortgages, corporate loan obligations and trust preferred securities. The $1.24 dividend yields 18.2 percent.
Luminent Mortgage Capital Inc. (LUM-$9.05) is an $87 million revenue REIT with a portfolio of single-family, adjustable rate and fixed-rate mortgages. The $1.28 dividend yields 14.1 percent.
MCG Capital Corp. (MCGC-$15.88) is a $157 million revenue business development company that acquires, finances and leverages companies that have revenues between $30 million and $200 million. The fund’s $1.76 dividend yields 11.1 percent.
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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