Posted At : December 18, 2009 2:07 PM
The most recent Barron’s cover story – Better Than Bonds -is a must read. Apart from the fact that Barron’s is trying to steal my idea and take credit for my “Real Return” investment strategy of investing in high yielding MLP’s, REIT’s, Preferred stocks and corporate bonds, (kidding of course) it’s a great validation of our approach.
As I have long been discussing, there is a tremendous opportunity in investing for “Real Returns” through dividends and income. Buying things that don’t pay dividends is like playing Craps. You’ll be up, you’ll be down and depending on when you walk away from the table will dictate how much money you have left. MLP’s, Preferred stocks, REIT’s and short term corporate bonds right now currently have great yields with downside protection. These are ideal for every investor, except the super aggressive trader as well as for alternatives CD’s. In particular, there is are particularly exceptional opportunities in MLP’s right now, as many provide very high yields of 8-12%, most of which is tax free, capital appreciation and downside protection. Although many are way up, they still likely have a long way to go.
As the article states: “Master limited partnerships could be the past decade’s quietest investment success, generating annualized returns of 18%, against 15% for gold and about zilch for the Standard & Poor’s 500. While the MLP market has rallied sharply this year, major operators still yield 7% to 8% (and more) and have good growth prospects. Despite generating some of the best returns of any asset class in the past decade, MLPs are unfamiliar to most investors. That ought to change, because MLPs now provide 7%-to-8% dividend yields, and much of that income is tax-deferred. Dividend growth could run in the mid- to-high-single-digit range in the coming years, resulting in total annual returns above 10%”
Naturally investors want the very best returns with the least risk possible. Our Real Return strategy of concentrating on dividends offers a great approach of seeking excellent returns with much less risk than the stock market with downside protection. It’s not an approach that is looking for all of the upside potential (with all of the downside as well), but for those happy with most of the upside, more predictable and steady returns and much less risk, this works great. Click the link to see the 11/18 edition, Market Update – How to invest in this market. If you want to see if this approach is right for you, reply back or give me a call.
*In addition, I have an excellent report that discusses and explains MLP’s (Master Limited Partnerships – High Yields and Low Taxes.) If you would like a copy, give me a call and I will send it to you. No charge for subscribers.
President of Springer Financial Advisors