Kiplinger’s “Earn 8% or More”- High Yield Investments

Kiplinger’s July Issue highlighted opportunities to earn 8% or more on tankers to pipelines to real estate stocks, thus uncovering investments with the best yields.

1. Closed-End Income Funds

a. First Trust Strategic High Income (FHI)- bond fund, which borrows to invest in bank loans, mortgage-related securities and junk bonds. Share price plunged from $20 in early 2007 to less than $10.50. Today the price is $13.00 and offers a 14.6% yield.

b. Denali Fund (DNY) - trades at 9.5% discount to Net Asset Value and is converting from REIT fund to general leveraged fund. Today’s yield is more than 12%.

2. Junk Bonds- today the gap is 6% over treasuries, but there are many defaults and downgrades on individual bonds, so it is better to invest in a fund. Each of the funds below offer close to 8% yields.

a. Metropolitan West High Yield Bond (MWHYX)

b. Payden High Income (PYHRX)

c. TCW High Yield Bond I (TGHYX)

3. Energy Income Trusts - payouts vary with the prices of oil and gas, and since share prices respond to prices in oil and gas, it is a good idea to dollar cost average.

a. BP Prudhoe Bay Royalty Trust (BPT) - 11% yield

b. San Juan Basin (SJT) -7.7% yield

c. Cross Timbers (CRT)-9.9% yield

d. Enerplus (ERF) -10.5% yield

e. Harvest Energy (HTE) - 14.7% yield

3. Ocean-Shipping Fleets

a. Seaspan (SSW) - 7.3% yield

b. Genco Shipping & Trading (GNK) -5.7% yield

4. High Yield Property REITS - for high yields, focus on REITS that own hospitals, medical office buildings, and other health-care facilities.

a. Codell Spencer (CSA) - 7.5% yield

b. Medical Properties Trust (MPW) - 8.4%

c. First Industrial Realty Trust (FR) - 9%

5. Pipelines

a. Enterprise Products Partners (EPD) - 6.6% yield

b. Kinder Morgan Energy (KMP) -6.4% yield

c. Magellan Midstream Partners (MMP) - 7% yield

d. Plains All American Pipeline (PAA) - 7% yield

6. Emerging-Market Bonds

a. Fidelity New Markets Income (FNMIX) - 5.6% yield

b. Pimco Emerging Markets Bond D (PEMDX) -5.6% yield

Track the performance of these picks at:

http://www.trackthepros.com/categories.php?category_id=988