We're calling them Retirement Savings Stocks -- 10 under-the-radar investments that can provide the cash needed to enhance your quality of life after you leave the workforce. A second income, in effect. This collection of dividend payers is anything but ordinary. They dole out as much as 14 times what you can get from CDs, seven times what you'd collect from bonds and five times the payout of "brand name" Dow stocks such as Coca-Cola (NYSE: KO).

And each of these stocks is hand-picked by High-Yield Investing's Carla Pasternak, one of the most widely-followed income analysts in North America... and her criteria are rigid.

Among the factors considered before a stock is included in the pages of High-Yield Investing:

  • A long track record of paying consistent and rising dividends.
  • A matching history of improving earnings.
  • Strong cash flow sufficient to pay dividends and then some.
  • High projected growth that can lead to dividend increases.
  • Manageable debt loads, so that there's more cash to distribute.
  • A noncyclical business model that helps a company prosper in all market conditions.

That means the 10 companies that make up the list of Retirement Savings Stocks are among the cream of this crop.

As of October 2012, the average yield on these 10 stocks was more than 8%... with two of them yielding more than 14%.

Think about that.

With a $100,000 nest egg, a five-year certificate of deposit yielding the average 1.73% would pay you $1,730 after one year. The payout on a 10-Year Treasury note yielding 1.67% would be $1,670. But a portfolio of Carla's Retirement Savings Stocks, with an average yield of 8%, would pay $8,000.



After 10 years, these high-yield stocks would return more than $60,000 in additional income when compared to Treasury bonds or CDs -- not even counting potential dividend growth or capital gains.

We've heard from enough of our readers to know that most of you are interested in -- and knowledgeable about -- income securities. Yet I doubt that you ever tire of seeing statistics like this: According to the asset management firm RidgeWorth Investments, from 1972 through 2010, U.S.-based dividend-paying stocks returned nearly 9% annually, trouncing the 1.7% return from non-dividend payers.

And when it comes to Carla's 10 Retirement Savings Stocks, the news gets even better.

Cases in point: MV Oil Trust (NYSE: MVO), currently yielding 10.7%, and American Capital Agency Corp. (Nasdaq: AGNC), which sports a yield of 15.3%.

MV Oil Trust was created by MV Partners LLC, a private energy company, in August 2006 and began operations in January 2007. The trust was formed to receive 80% of the royalties from about 1,000 oil and gas wells located in regions of Kansas and Colorado.

American Capital Agency Corp. is a mortgage real estate investment trust (mREIT) that buys mortgages backed by government-supported agencies Fannie Mae, Freddie Mac, or Ginnie Mae. Like most mREITs, American Capital Agency uses significant leverage by entering into repurchase agreements (repos) and hedges interest rate and prepayment risk through derivatives. It effectively borrows at short-term rates and invests in longer-term mortgages, pocketing the difference.

These the two high yielders have delivered total returns significantly greater than the broader market... and even better than high-profile dividend-payers AT&T (NYSE: T) and Verizon (NYSE: VZ) during the past five years.



Action to Take --> If you're a "retirement-age" investor, or any investor looking for safe, reliable income for that matter, then these are exactly the kinds of stocks you should own. Of course, there is no guarantee this performance will continue, and in fact, high yielders can lose money. But with the Retirement Savings Stocks Carla is tracking, I like our odds.

Related Articles
  1. Investing

    Build a Retirement Portfolio for a Different World

    When it comes to retirement rules of thumb, the financial industry is experiencing new guidelines and the new rules for navigating retirement.
  2. Insurance

    Top 6 Car Insurance Companies in New York

    Read about the top private auto insurers licensed to operate in New York, and learn about recent trends in market share among these companies.
  3. Markets

    The 5 Biggest Chinese Natural Gas Companies

    Read about the top five Chinese natural gas companies as measured by gas production volume and learn a little more about their business operations.
  4. Markets

    The 5 Biggest Chinese Insurance Companies

    Read about the top Chinese insurance companies by market capitalization, and learn a little about their positions in the marketplace.
  5. Insurance

    Top 8 Car Insurance Companies in New Jersey

    Read about the top personal auto insurers operating in New Jersey, and learn about recent trends in market share among these companies.
  6. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  7. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  8. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  9. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Fractal Markets Hypothesis (FMH)

    An alternative investment theory to Efficient Market Hypothesis ...
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!