Safety AND High Yields

Yesterday, the Dow plunged. Today, it’s soaring. All proof positive that you urgently need two things:

First, you need protection against the risk of stock price declines.

Second, you need solid, high yields you can rely on quarter after quarter, giving you double, triple — even quadruple — the best return you could get on Treasuries, bank CDs, or virtually any other fixed-income investment.

I aim to give you both.

In Dividend Superstars, I just recommended a simple investment that helps protect your portfolio from downside risk.

If you’re a subscriber, be sure and read the issue that just went to press as soon as possible! It will tell you how bad the bear market could get, and what to do about it.

Of course, I also specialize in picking out a handful of solid companies that reliably spit out cash dividends like ATM machines on autopilot.

Here are just a few of the companies I’m recommending …

Dividend Superstar #1:
10.1% Yield from a Rural Phone Company with
Steady Revenues and a Huge Cash Nest-Egg

I’ll let you in on a little-known fact: Despite the rising popularity of cellular telephones, companies that operate traditional telephone businesses are recording very handsome profits. And that’s doubly true for companies with big presences in rural areas.

My favorite dividend-paying company in this space is proof positive: In the first quarter of 2008, it posted revenues of $105 million and profits of $49 million. Meanwhile, this company is busily selling other money-making services like high-speed Internet to its existing customers.

The stock’s outsized dividend looks darn secure to me. The company has more than $34 million in cash that could be used for payments to shareholders.

Investors are ignoring this company because they’re convinced that traditional phone services are dead. I say people will continue using this firm’s landlines as well as other services like high-speed Internet and digital television services.

Bottom line: The stock’s annual yield is currently 10.1%, and as an extra bonus, I think the shares stand to increase substantially in price.

Dividend Superstar #2:
15.7% Yield from a Secretive Investment Company
That’s Paid Dividends for 43 Quarters Straight

It’s a fact of life — the big money guys on Wall Street have access to deals that you don’t. They have the inside scoop on what’s happening … they have the ability to buy into public — or private — companies … and they stand ready with hundreds of millions of dollars when an attractive business needs a lifeline.

How can you compete with that? You can’t. Nor do you have to. Especially because you can buy this company’s shares and it pays very juicy, steady dividends. It currently has about 220 businesses in its portfolio. That gives it tremendous diversification across sectors and industries.

What’s more, because of the way this company is structured …

It must keep its debt under control, making it one of the least leveraged publicly traded financial companies in the U.S., and …
It must pay out 90% of its profits to shareholders in the form of dividends!

With all the risks in the financial sector right now, it’s refreshing to find a company like this that’s both conservative with its balance sheet and generous with its dividends. In fact, over the last 11 years, this investment firm has:

Paid a dividend in every single quarter as a public company (43 straight!).
Increased its dividend at a compound annual growth rate of 12%.
And paid out a total of more than $2.3 BILLION in dividends to its shareholders.

Since the company went public on the New York Stock Exchange about a decade ago, its shareholders have received almost $2 in dividends for every dollar they paid originally for the stock. And that’s just dividends, without even adding in the stock’s appreciation. Including both dividends and growth, the stock has posted a whopping 490% total return, or an average total of 18%.

Dividend Superstar #3:
15.4% Yield from Fleet of Profit-Gushing Oil Tankers
That Generate Up to $4.4 Million Each Day

Oil companies are geysers of cash. No secret there. But an even steadier business is the massive container ships that transport the oil. These companies churn out fat profits whether oil prices are up or down.

If you own those ships, you stand to rake in a constant stream of cash, and that’s especially true of my favorite dividend superstar in this sector.

Take a guess at how much it charges to use one of its ships! In the first quarter of 2008, the average rate for one of its Very Large Crude Carriers (VLCCs) was $82,400. And according to early numbers, it was getting an average of $112,000 in the second quarter.

Once you realize that the company boasts dozens of ships, you’ll get a sense of just how much money it can make in a single day. Take the average daily rate from early 2008 and multiply it by 54 — that’s $4.4 million in 24 hours.

No wonder this firm can afford to pay out huge dividends year in and year out. Take a look at just how kind it’s been to investors recently:

In 2005, it handed investors dividends of $8.10 per share.
In 2006, it paid out dividends worth $7.55 a share.
And in 2007, it paid dividends of $8.25 per share.

Looking ahead, whether oil is up or down, I certainly don’t see less oil being shipped anytime soon. And I should also note that this company is involved in transporting other hot commodities like coal and iron, too. If anything, rising worldwide demand for natural resources argues for even bigger profits ahead for this shipper.

Together, These Three Stocks Give You Solid
Diversification and an Average Annual Yield of 13.7%!

I can’t give you the names of these companies. That wouldn’t be fair to my paying subscribers. But I do hope you can see just what kind of high-yield opportunities are out there right now.

Now I’m not going to sit here and tell you that buying these stocks will make you rich in a heartbeat. That’s not my style. Nor do I advocate just running out and putting all of your money into their shares. Like any investment, they come with a risk of loss.

But together, they’re handing out an average annual yield of 13.7%. And they operate in three completely unrelated industries.

So in my view, they give you the chance for tremendous income with a nice, solid level of diversification. Even with a modest part of your overall portfolio, I think these three stocks can go a long way toward boosting your overall annual income.

One word of warning: You can’t simply scan the paper and blindly pick out the companies that happen to be paying the biggest dividends today. For each and every high-yielding company you invest in, you need to make sure they have a solid history of faithfully paying — and even raising — their dividends year after year. You want to make sure they have the financial wherewithal to continue dishing out juicy double-digit dividends in good times or bad.

But if you do your homework, and take specific steps to protect your portfolio from further market dips, I think you can get the best of both worlds — limited downside and maximum income.

Sincerely,

Nilus

About Money and Markets

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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.

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