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Lowdown on 10 high-risk issues(Copley News Service Via Thomson Dialog NewsEdge) Dear Mr. Berko: I have $50,000 that I'd like to invest and get a 10 percent dividend return. I know what I'm asking is risky but I can afford the risk with this money. I recall a few years ago that you published a list of deep-discount high-yield bonds all yielding more than 10 percent. An engineer colleague that I work with bought every one of those bonds. He still brags about how well they have done. So how about listing 10 stocks (not bonds) and I'd invest $5,000 in each. E.P. Destin, Fla. Dear E.P.: If you can wade in molten lava, gargle with battery acid, bench press a Honda Civic, jitterbug in snowshoes, if you can sky-dive without a parachute, thread a needle while on a galloping camel, then, and only then, am I comfortable presenting the following high-yield securities for your consideration. They are either among the best of the worst or among the worst of the best. However, I must tell you that my clients and I have small positions in each of these issues. So I wish you good luck because you may (or may not) need it. - Impac Mortgage Holdings Inc. 9.125 percent Series C Cumulative Preferred (IMH.C-$23.70). This is a mortgage real estate investment trust that operates three businesses: long-term investment, mortgages and warehouse lending. IMH has a $29 billion portfolio that generated about $1.6 billion in revenues last year and earnings of $1.14. This year, IMH should earn $1.30. The $2.28 dividend has a 9.6 percent current yield. - Arlington Tankers Ltd. (ATB-$23.01) operates a fleet of eight oil tankers with long-term fixed charters that reduces exposure to the enormous volatility in this market. This small company had $55 million in 2006 revenues and earned $1.27. Revenues and earnings are expected to be nearly identical in 2007. ATB's $2.29 dividend has a 9.9 percent current yield. - Liberty All-Star Equity Fund (USA-$8.05) is a closed-end fund with a widely diversified portfolio totaling $1.3 billion. The fund managers seek to achieve a total return from long-term gains and dividends each year. The current 88-cent dividend yields a strong 10.9 percent. - Capstead Mortgage Corp. $1.60 Cumulative Convertible Preferred, Series A (CMO.A-$17.85). CMO generates income by investing in real estate-related assets on a leveraged basis. Last year CMO lost 85 cents a share on $130 million in revenues and this year the street expects CMO to earn 67 cents a share on slightly higher revenues. The shares are convertible into 1.54 shares of common at the holder's option and the $1.60 dividend has a 8.8 percent yield. - Baytex Energy Trust (BTE-$18.83) is a $530 million revenue Canadian energy trust that acquires, develops and produces natural gas and oil in Alberta and British Columbia. BTE expects to earn $1.88 this year, down from $2.25 in 2006. The $1.88 dividend gives the shareholder a 9.9 percent current return. - Deerfield Triarc Capital Corp. (DFR-$15.90) invests in real estate-related securities plus various other assets and has a portfolio valued at $8 billion, consisting primarily of residential mortgage-backed securities. Earnings of $1.62 last year are expected to come in at $1.72 this year and the $1.60 dividend yields 10 percent. - Atlantic Power Corp. (ATPWF-$8.65) operates and owns power generation plants and has interests in a diversified portfolio of 15 power plants in the United States. On revenues of $328 million, last year Atlantic Power earned 14 cents a share and expects to earn 37 cents this year. The 92.6-cent dividend yields 10.6 percent. - New Century Financial Corp. 9.75 percent Series B Cumulative Preferred (NEW.B-$25) provides first and second mortgage products to people who generally do not meet credit, documentation or underwriting standards. Last year's revenues of $2.55 billion produced earnings of $6 a share and slightly lower revenues for this year should produce earnings of $4.20 a share. The $2.43 dividend pays 9.7 percent. - Algonquin Power Income Fund (AGQNF-$8.17) is a Canadian open-end investment trust. AGQNF produces energy from four sources: hydroelectric power, cogeneration, alternative fuels and infrastructure assets. AGQNF owns 48 hydro plants, five natural gas cogeneration plants, 18 alternative fuel facilities plus 15 water reclamation and distribution facilities. Expected revenues of $221 million this year should produce earnings of 42 cents a share and the 80-cent dividend yields 9.7 percent. - Canetic Resources Trust (CNE-$13.70) acquires, explores, develops and produces oil and natural gas in the U.S. and Canada. This Canadian oil trust earned 77 cents on $690 in revenues last year and expects to earn 87 cents on higher revenues this year. The $2.40 dividend, which should be reduced to $1.67 this year, will yield 11.5 percent. These 10 very speculative issues will give you a portfolio yield of 10.1 percent. But I remember that Barnard Baruch once said that a fool and his money can throw a heck of a party. Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at [email protected]. Copyright 2006 Copley News Service Visit Copley News Service at www.copleynews.com. Copyright 2006 Copley News Service |