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Subject:  Re: high yield dividend funds Date:  1/16/2011  5:08 PM
Author:  pauleckler Number:  68267 of 88775

I'm not familiar with "high-yield dividend" funds.

For income you could do a portfolio of preferred stocks. My list of these is here--

But note my list is not all inclusive and has not been updated in a while.

Before buying any of these, you will want to do a bit of research. In particular be aware that most are callable at $25/sh or $10/sh. So be careful of those issues priced just over those numbers. They can be called from under you at a loss. You can get more information on each of these on and they have links to the original prospectus, which will fully explain details of call provisions, etc.

Also be aware that you probably want issues rated BBB or better. Below that are considered junk bonds. Yields are higher, but risks are higher. And note that ratings in my spreadsheet may be out of date. Check them out on for current info.

You can buy these preferred stocks from a discount broker (at low commissions) in whatever quantity you like. Starting with as little as $25. Usually you want more than that to keep commissions low. They are thinly traded and usually should be purchased with limit orders. Rather than put all your funds into one of these, you probably want a portfolio of at least five issues.

Note these usually do not pay qualified dividends. Hence, the income if fully taxable at ordinary income tax rates.

As to high dividend stocks, I would name a couple in my list: Suburban Propane (ticker SPH), and Amerigas (APU). These are propane distributors currently paying 5.7 and 5.3% respectively.

You will find quite a few high yield bond funds. Right now people worry about the future of munipical bonds. With reduced income some may default on their bonds. Nuveen Select (NQS) and Blackrock (BLE) are two that I like. Prices have fallen due to concerns and they are now paying near 8%, and most of that is Fed Tax Free.

I will defer to others on corporate bond funds. Suffice it to say there are many. Higher yield ones invest in junk bonds and are riskier.

Another strategy you may find interesting is stocks with a long record of increasing dividends. The renewed tax law extends favorable treatment of qualified dividends. Up to $68K agi for a married couple they are tax free. Some companies have a long history of increasing their dividends. If you buy one of those paying say 4%, over time the increase in dividends will help your income keep up with inflation. In time they can become lucrative.

I hope that gets you started. If any of this needs more explaining, feel free to ask.
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