Dear Mr. Berko:

I have about $85,000 to invest in equities that yield more than 7.5 percent. My broker suggested that I ask you for some suggestions. He seems to think that you are usually right on the money when recommending high-yield issues, and he has made some serious money following your advice in the past.

D.R., Erie, Pa.

Dear D.R.:

There are still a few high-yield issues that might have long-term staying power and could improve the yield on your portfolio. I cull the list of high-yielders every quarter, and every once in a while I pull a few needles from the proverbial haystack. Here are a few high-yielders my clients and I may own — but be mindful that needles can draw blood.

New Century Financial Corp. 9.125 Percent Preferred (NEW.A-$24.60). New Century is a real estate investment trust and one of the country’s largest non-prime mortgage finance companies. NEW has a good balance sheet, and earnings for the next few years should remain strong. The preferred, which is redeemable at $25 and rated B by Standard & Poor’s, yields a comfortable 9.3 percent. The dividend does not qualify for the 15 percent tax rate.

First Trust Fiduciary Asset Management (FFA-$17.08) is a closed-end fund and emblematic of the cupidity of the brokerage community. Brokers sold millions of FFA shares with 5 percent juice at an initial public offering price of $20, knowing it would fall like a hot rock after offering. This fund has a portfolio of good stocks on which it successfully writes options. FFA is well-managed, trades at a 9 percent discount to net asset value, and the current $1.60 dividend yields a nice 9.4 percent.

Corporate Office Properties Trust 10.25 Percent Preferred (OFC.E-$25.53) owns, manages, leases, acquires and develops suburban office properties, primarily in Washington, D.C., which is always a good place to own real estate. The preferred is callable any time at $25, but many OFC watchers doubt it will be called, and I agree. It’s not rated, but the $2.56 dividend (does not qualify for the 15 percent rate) yields a comfy 10 percent.

Smurfit-Stone Container Corp. 7 Percent Convertible Preferred (SSCCP-$21.95) makes paperboard and paper-based packaging such as container board, corrugated containers, multiwall bags and recycled boxboard. This $8.4 billion revenue company will finally make a profit this year and an even better profit in 2007. The CCC-rated issue is a “busted” convert and is callable any time at $25. However, the $1.75 dividend yields a nice 8 percent and is taxable at 15 percent.

American Home Mortgage Investment Corp. (AHM-$33.39) originates and services residential mortgage loans and invests in mortgage-backed securities. Standard & Poor’s expects AHM to earn $4.80 this year and $5.19 in 2007. AHM has more than 600 retail and wholesale offices in 45 states, and Thomson Financial ranks the company as a buy. Meanwhile, the $3.84 dividend will give you a swell 11.5 percent yield, which is taxable at 15 percent.

Finally, FelCor Lodging Trust Inc. $1.95 Convertible Preferred (FCH.A-$24.35) owns a portfolio of 183 hotels (mostly upscale) with approximately 50,000 rooms. Names that you recognize are Embassy Suites, Crown Plaza, Doubletree, Sheraton Suites and Westin. S&P has a strong buy recommendation on the common and the convertible, which is rated CCC-plus and yields a fine 8 percent. The dividend does not qualify for the 15 percent tax rate.

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