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 last Thursday, the average yield on these 10 stocks was over 8%... with two of them yielding more than 14%.
Think about that.
With a $100,000 nest egg, a 5-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, these are exactly the kinds of stocks you should own. Of course, there is no guarantee that 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.
Stock AnalysisStuck on oil? Take a look at these six stocks—three that present risk vs. three that offer some resiliency.
EconomicsEmerging markets have been hammered lately, but these three countries (and their large and young populations) are worth monitoring.
Stock AnalysisPepsiCo has long been known as one of the most resilient stocks throughout the broader market. Is this still the case today?
InvestingHow do bond exchange traded fund (ETF) distributions work? It’s a question I get a lot. First, let’s explain what we mean by distributions.
Stock AnalysisThese three stocks are resilient, fundamentally sound and also pay generous dividends.
Investing NewsAre stocks cheap right now? Be wary of those who are telling you what you want to hear. Here's why.
Investing NewsHere are four stocks that offer good value and will likely outperform the majority of stocks throughout the broader market over the next several years.
Investing NewsHere are three resilient, dividend-paying companies that may mitigate some worry in an uncertain investing environment.
Stock AnalysisIf you're not sure where Ford and General Motors are going, you might want to look at this auto investment option instead.
Stock AnalysisLearn about the top energy companies in Russia, a country that holds some of the largest reserves of oil, natural gas and coal in the world.
When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
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 >>
A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
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 >>
The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>