Four Ways To Boost Yields And Returns
Wednesday, December 26, 2012
Printer-Friendly | PDF Version | Whitelist Us  | Also visit StreetAuthority

Four Ways To Boost Yields And Returns

-- By Carla Pasternak

What's the secret to building a strong high-yield portfolio? While there is no magic bullet, I do have some rules I follow to create portfolios that pay nearly double-digit yields and see strong capital appreciation. (Full Story Below)

Also in Today's Issue...

10 Simple Ways to Earn Extra Retirement Income This Year
For an instant boost to your income, look no further. One of our picks is yielding 14.5% right now, and it's handed investors 72% total returns since 2008. Learn more about this stock - and 9 others - in this special report.
Pay Your Mortgage With Options?
Or, you could pay your car payment, take a trip to visit the grandkids or go on a long overdue vacation. It's possible thanks to the income generating power of options. And best of all, options are actually much safer than you've been led to believe - if you know what less than 1 in 4 investors know about using options to generate income. For a proven way to increase income in retirement, click here.

Four Ways To Boost Yields And Returns

On average, they're yielding 7.9%. That's more than three times the yield of the S&P 500. Try getting that amount from a money market or savings account.

But that's not the half of it. In tandem with those high yields, the capital gains have been great too. The average total return for these forty securities is 28.4%. The best performer has gained 209.1%, yet still yields over 4.5%.

This isn't the performance of some secret index or an exclusive hedge-fund's holdings. It's what is currently happening within the portfolios of my High-Yield Investing advisory.

What's the secret to that sort of performance? How can you build a similar portfolio for yourself? Don't get me wrong -- I do an enormous amount of research and watch my holdings and the market like a hawk. But much of the good fortune comes from sticking to a few simple rules that you can use as well.

Over the years, these rules have proven their value in bull and bear markets. The techniques are not complicated. Anyone can follow them and potentially get the same results. So I wanted to share with you, my fellow income investors, the four basic rules I follow to build my winning High-Yield Investing portfolios. I'm confident these tips can work for you as well:

Rule #1: Look for High Yields Off the Beaten Path

To find exceptional returns and yields, I frequently venture off the beaten path. Some of the best yields I've found have come from asset classes few investors know about. A case in point is Canadian REITs. These REITs delivered exceptional yields this year (some as high as 12%), but many stateside investors have never heard of them.

Other lesser-known securities I look at are exchange-traded bonds, master limited partnerships and income deposit securities. All of these usually yield more than typical common stocks. In addition, they can also be less volatile and hold up better during market downturns.

If you're not familiar with these securities don't fret. I have -- and will continue to -- cover them within Dividend Opportunities.

Rule #2: Consider Alternatives to Common Stocks

It is a well-known fact that the vast majority of common stocks simply don't yield much. The S&P 500's average yield is only 2.0%.

So when I can't find the income I want from common stocks I like, I look elsewhere. My first stop is often preferred shares of the same company, which almost always yield more. Say you wanted to invest in General Electric (NYSE: GE). The common shares of General Electric (NYSE: GE) currently yield 3.2%, but you can find preferred shares of GE yielding upwards of 6.5%. You still benefit from the underlying company's backing, but with a much higher yield.

Similarly, many companies offer exchange-traded bonds. While you don't get actual ownership of the business as you would with common stock, you will earn a much higher yield and have your principal backed by the underlying company.

Rule #3: Look for Securities Trading Below Par Value

Some of my highest returns have come from buying bonds when they trade below par value. Par value is simply the face value assigned to a stock or bond on the date it was issued. Most exchange-traded bonds (which you can buy just like a share of stock) have a par value of $25 per note.

But sometimes -- for instance, during a market panic -- investors indiscriminately dump these bonds, pushing their prices down. By purchasing the bonds at a discount to par, you lock in great opportunities for capital gains in addition to higher-than-normal yields.

A case in point was Delphi Financial Group 8% Senior Notes (which have since been called). I purchased the notes in July 2009 for $19.27 -- a 23% discount to par value. During the 16 months I held, I collected $3.00 per note in interest payments while the shares rose to their $25 par value. In total, the notes returned over 45%.

Rule #4: Sell When It's Time

This rule may seem the most obvious, but it is also the most difficult to follow.

Like everyone else, I hate to admit I was wrong about an investment. But I find it even harder to watch losses mount as a pick falls further. That's why I'm not afraid to take a loss. I swallowed my pride and closed out several positions for losses during the last bear market, and I'm glad I did. Continuing to hold these would have greatly reduced returns on my portfolio.

It may sound like a cliche, but knowing when to sell is just as important as knowing when to buy. A wise investor knows when to cut losses and move on to the next opportunity. If the security in question is falling with the market, I may not be worried. However, if changes in the company's operations mean it could see rocky times ahead, I don't want any part of it.

Good Investing!

Carla Pasternak's Dividend Opportunities

P.S. -- StreetAuthority has just identified 10 stocks with the potential to earn you an extra $25,000, $45,000, and even as much as an additional $55,000 a year... Click here to learn about these 10 stocks now.

Disclosure: Neither StreetAuthority nor Carla Pasternak own shares of the securities mentioned in this article. In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any "real money" model portfolio. Members of our staff are restricted from buying or selling any securities for two weeks after being featured in our advisories or on our website, as monitored by our compliance officer.

Income Notes

The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent in October this year from October 2011. Making it the biggest climb since May 2010.

-- Bloomberg

10 Best Retirement Income Stocks Now

Some pay quarterly. Others pay monthly. All offer you a safer, more stable, and reliable source of high income even if the market goes down.

Get the full details and stock symbols here.

Breaking News

The Best Way To Profit From The "Dividend Decade" 

In the next 10-years I predict all of the market's total return will come from dividends. But, a carefully-selected group of stocks will see both capital gains and rising dividend payments...

Read On...

Top 10 Stocks for 2013

It's our most popular piece of research to date. Our annual Top Ten Stocks list has beaten the S&P 7 out of the last 9 years.

Read On...

Take This One Simple Step NOW to Protect Yourself from the "Fiscal Cliff"

Want to know my advice for the "Fiscal Cliff?" My answer might surprise you...

Read On...



Home | Issue Archives | About Us | Meet the Staff | Subscribe
Premium Content
Research Reports | Media Coverage | Testimonials | Advertise

Dividend Opportunities is a publication by StreetAuthority, LLC, 4601 Spicewood Springs Rd, Building 3, Suite 100, Austin TX 78759 or You are receiving this newsletter because you visited us at and registered to receive our complimentary investing newsletter -- Dividend Opportunities. If you feel you have received this issue in error, please follow the instructions below to unsubscribe or contact us by visiting our web site.

DISCLAIMER: StreetAuthority, LLC is a publisher of financial news and opinions and NOT a securities broker/dealer or an investment advisor. You are responsible for your own investment decisions. All information contained in our newsletters or on our web site(s) should be independently verified with the companies mentioned, and readers should always conduct their own research and due diligence and consider obtaining professional advice before making any investment decision. As a condition to accessing StreetAuthority materials and web sites, you agree to our Terms and Conditions of Use, available here, including without limitation all disclaimers of warranties and limitations on liability contained therein. Owners, employees and writers may hold positions in the securities that are discussed in our newsletters or on our web site.

The information contained herein does not constitute a representation by the publisher or a solicitation for the purchase or sale of securities. Our opinions and analyses are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in this report should be independently verified with the companies mentioned. The editor and publisher are not responsible for errors or omissions.
StreetAuthority receives no compensation of any kind from any companies that may be mentioned in our newsletters or on our web site. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities discussed in this report or on our web site.

To Unsubscribe
You may choose to stop receiving our Dividend Opportunities newsletter at any time.
Unsubscribe here.

Subscribe for FREE

Subscribe to Dividend Opportunities today and you'll receive a FREE newsletter three times a week, plus a FREE in-depth research report that identifies some of today's highest-yielding securities.

There's absolutely nothing to purchase, we'll keep your email address private, and you can cancel at any time. You truly have nothing to lose, so take advantage of this no-hassle, risk-free offer today!

Click here to subscribe now.