Dear Mr. Berko:  Please give me your thoughts on Heineken Beer and on ECC  Capital, which is paying a 24-cent dividend and yields 20 percent.  I could buy 10,000 shares of ECC if the dividend is even  half safe. And I’d like to buy 200 shares of Heineken Beer,  because I think their beer is the best.  L.D., Waterloo, Iowa

Dear L.D.:

Staying on top of some mortgage  real estate trusts is like painting a portrait  while riding a galloping camel.  ECC Capital Corp. (ECR-$1.16), which  sells, purchases and services first and  second subprime mortgages  on single-family homes, is no  exception.

Last year, ECR generated  $343 million in revenues from  offices in Florida, Illinois, California,  Virginia and New York  with a strong emphasis on  “nonconforming” borrowers.  That’s a politically correct  term for deadbeats. The huge  dividend is a result of the sale  of ECR’s subprime mortgage  banking business to a subsidiary  of Bear Stearns Cos.  Inc. for $26 million. The deal is supposed  to close by the end of the first  quarter of 2007, and ECR intends to pay  out all the proceeds of the sale (80  cents per share) to its shareholders.  The first payout of 24 cents will be  made by the end of January, and the  remainder is to be paid by the end of  this quarter.

The 20 percent yield sounds compelling  if you’re a riverboat gambler, but  I’m concerned that ECR might not  recover after it pays that dividend. ECC  Capital Corp.went public in early 2005  and traded between $7 and $5 a share,  sporting a $2.75 book value.

Still, some believe the company will  survive after selling its mortgage banking  business.

Under the Bear Stearns deal, the  name will change to Encore Credit, and  the company expects to maintain its  loan purchase obligations as well as  remaining leases. I suspect this thing is  radioactive and wouldn’t touch it with  a 10-foot pole.

But I do like Heineken N.V. (HINKY-  $25.30), a Dutch brewer home-ported  in Amsterdam that earned $1.1 billion  last year on $15 billion in revenues. In  fact, I like HINKY more than Anheuser-  Busch Cos. Inc. (BUD-$51), which also  had $15 billion in revenues and earned  $1.8 billion last year. I like HINKY better  than BUD because its revenue  growth is 5.9 percent over the last five  years, which is three times that of  BUD’s. I like Heineken because its net  profit margins have improved while  Busch’s have remained frozen, and I like  HINKY better than BUD  because it has a higher return  on capital, a better debt-toequity  ratio and superior gross  margins.

And I like HINKY because  the company’s premium light  beer revenues have grown by  more than 70 percent at the  expense of Bud Light and  Miller Lite. According to a  knowledgeable acquaintance,  Bud and Miller’s light beers  taste like tepid tea, but  Heinekin Light “grabs you  where it counts.”

He might be right, because Sam and  Suzy Six-Pack are pulling it off the  shelves even though it sells at a premium  of 50 cents a bottle to Bud Light.The  bottle’s green color and short neck keep  the European cachet, and its slim, tall silhouette  gives it a classy, modern, almost  exclusive appearance. According to  Beer Business Daily’s Harry Schumacher,  it’s “like a pretty girl you coveted.”

HINKY’s light beer revenues are  brewing, but, best of all, the company  has managed this success without cannibalizing  sales of its original brew.

Though light beer revenues haven’t  been exciting in the past few years,  they still account for 51 percent of the  overall beer market and are now growing  at 3 percent a year. The growth of  Heineken Light, after 16 months of  experimentation to find the right brew  balance, is sizzling.

Last year HINKY earned $1.20 a  share.This year the earnings are expected  to come in between $1.44 and  $1.48. J.P. Morgan rates Heineken as a  buy, and I’m compelled to agree.