Income Investing

DATA UPDATED CLOSING 01-27-12 shown in [ ]

Everyone should include investing for income as a part of their portfolio. As with all investing, diversification and risk tolerance would apply to the strategy for income investing. Usually the higher the yield the higher the risk and this is mostly true for stocks yields in the neighborhood of 20%. But there are some yields of 5% to close to 10% that are in the moderate to low risk area. Going below around 5% really doesn't seem necessary from a risk point of view since most stocks yielding less than that are not particularly less risky than some in the 5% and maybe higher range.

In the following, prices and yields are as of closing on Fri. 08-26-11 and in parenthesis are (price; yield; div. on last pay date for that period, not yearly; div. frequency, monthly as Mo or quarterly as Q). As usual past performance is not necessarily indicative of future performance. All investors should do their own research before investing.

Many stocks in the high risk and high yield area are REITs just because of their high yield. REIT dividends are mostly non-qualified for tax purpouses. Some examples are:

Invesco Mortgage Capital Inc. Co (IVR); (17.08; 23.10%; 0.97 on 06-15-11;[15.81; 16.40%; 0.65]; Q); Div. variable. A mortgage real estate investment trust(mREIT) founded 2008, acquires, finances and manages residential and commercial mortgage-backed securities and mortgage loans.

American Capital Agency Corp. (AGNC); (28.06; 20.20%; 1.40 on 06-21-11;[29.09; 19.30%; 1.40]; Q); Div. same 09-30-09 - 06-21-11. REIT. Invests in agency pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a U.S. Government agency or a U.S. Government sponsored entities.

Annaly Capital Management (NLY); (17.60; 15.00%; 0.65 on 06-28-11;[16.81; 13.60%; 0.57]; Q); Div. variable. REIT. Engages in the ownership, management, and financing of a portfolio of investment securities. The company invests primarily in mortgage pass-through certificates, collateralized mortgage obligations, agency callable debentures, and other mortgage-backed securities representing interests in or obligations backed by pools of mortgage loans. Annaly Capital also invests in Federal Home Loan Bank, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association debentures.

Perhaps medium risk of various types:

Hatteras Financial Corp (HTS); (26.97; 15.00%; 1.00 on 06-23-11; [27.60; 13.00%; 0.90]; Q); Div. variable; 1.00 or above since 10-01-08. REIT. Invests in adjustable-rate and hybrid adjustable-rate single-family residential mortgage pass-through securities guaranteed or issued by the United States Government agency, or by the United States Government-sponsored entity.

Frontier Communications Corporation (FTR); (7.22; 10.40%; 0.188 on 06-07-11; [4.31; 17.40%; 0.188]; Q); Div. dropped from 0.25 on 06-07-10 to 0.188 on 09-07-10. Wide range of telecommunications services.

Low risk of several types:

Reality Income Properties (O); (33.64; 5.20%; 0.145 on 07-28-11; [36.61; 4.80%; 0.146]; Mo); Div. steadily increasing for over a decade. Reliable source of monthly income. REIT. Engages in the acquisition and ownership of commercial retail real estate properties in the United States. The company leases its retail properties primarily to regional and national retail chain store operators.

AT&T, Inc. (T); (29.04; 5.90%; 0.43 on 06-06-11; [29.16; 6.00%; 0.44]; Q); Div. steadily increasing for over a decade. Qualified dividend. Engaged in almost all aspects of the telecommuniction business too broad and extensive to list.

Verizon Communications Inc. (VZ); (35.76; 5.50%; 0.488 on 07-06-11; [37.21; 5.40%; 0.50]; Q); Qualified dividend. Provides communication services. The company operates through two segments, Domestic Wireless and Wireline. The Domestic Wireless segment offers wireless voice and data services; and sells equipment in the United States. The Wireline segment provides voice, Internet access, broadband video and data, Internet protocol network, network access, long distance, and other services in the United States and internationally.

Dreyfus Strategic Municipals Inc. (LEO); (8.08; 7.30%; 0.049 on 08-10-11; [9.16; 6.40%; 0.049]; Mo.); Div. was 0.049/mo 12-01-09 - 08-10-11; 0.042/mo 02-07-06 - 11-12-09. Mostly Federal tax free. Operates as a diversified, closed-end management investment company. The fund invests primarily in municipal obligations of various states of the United States.

Dreyfus Strategic Municipal Bond Fund Inc. (DSM); (8.07; 7.10%; 0.048 on 08-10-11; [8.90; 6.40%; 0.048]; Mo.); Div. relatively consistent or increasing. Mostly Federal tax free. Operates as a diversified, closed-end management investment company in the United States. It primarily invests in long-term municipal investments.

Disclaimer: Long: IVR, AGNC, NLY, FTR, O, T, LEO.