Gold ETF IAU 10 for 1 stock split (ishares)

BlackRock Announces Share Split of iShares® COMEX® Gold Trust
San Francisco, CA, June 11, 2010—BlackRock, Inc. (NYSE: BLK) today announced that the Board of Directors of BlackRock Asset Management International Inc., sponsor of the iShares® COMEX® Gold Trust (NYSEArca: IAU/TSX: IGT) (the "Trust") has authorized a 10 for 1 split for shareholders of record as of the close of business on June 21, 2010, payable after the close of trading on June 23, 2010. The Trust shares will begin trading with split-adjusted pricing on the NYSEArca on June 24, 2010. The Trust, which is cross-listed on the Toronto Stock Exchange, will commence trading on a split adjusted basis on TSX on June 17, 2010. Post-split shares are expected to be distributed to shareholders' accounts on June 28 2010, and shareholders are expected to see the change in their holdings sometime after June 28, depending upon their brokerage firm's procedures.




The 10-for-1 split will lower the share price and increase the number of outstanding shares. The total value of shares outstanding is not affected by a split.



Hypothetical example of 10-for-1 split:



Period Number of Shares Owned Hypothetical Market Price/Share (U.S.$) Total Value (U.S.$)
Pre-split 100 $120 $12,000
Post split 1,000 $12 $12,000

Shares of the iShares® COMEX® Gold Trust are expected to reflect, at any given time, the price of the gold owned by the Trust, less the Trust's expenses and liabilities. As of June 10, 2010, the Trust had U.S. $3.3 billion in total net assets.

Downgrade: Miami Municipal Bonds (Miami Herald)

Posted on Thu, Jun. 17, 2010
Standard & Poor's downgrades Miami bond rating by two notches
BY PATRICIA MAZZEI
pmazzei@MiamiHerald.com

A key agency has downgraded cash-strapped Miami's bond credit rating, a shift that will leave the public footing a higher bill for big-ticket projects, including parking garages for the new Marlins ballpark.
Standard & Poor's Ratings Services dropped two of the city's critical bond credit ratings by two notches, making it more expensive for Miami to borrow money at a time the city is scrambling to keep its budget afloat.
``That will have a significant impact on the cost of projects,'' said Tom Tew, a Miami securities attorney who has represented the city in the past. ``This is just another straw on the camel's back.''

Standard & Poor's lowered the rating for general obligation bonds -- usually backed by property taxes -- from A+ to A-, and the rating for bonds backed by other revenues from A to BBB+. The rating agency cited the city's climbing employee pension costs and unwillingness to raise taxes as reasons for its negative credit outlook.

``They have skepticism of the ability of the city to reduce expenses,'' City Manager Carlos Migoya said Thursday.

``I feel very confident that we'll be able to do that,'' he added -- possibly through employee union negotiations or layoffs.

The most immediate fallout: Funding for the city to build surface parking lots and four garages at the Marlins' new home in Little Havana.

Miami plans to float $104 million in bonds next month to finance the garages. Because of the lower bond rating, it will cost the city $15 million more to pay off those bonds over the next 30 years, the city manager estimated.

Migoya said that is about $15 million less than the garages would have cost over three decades if the city were building during boom times with higher construction prices.

The bonds will be paid off with money from a variety of sources, including a convention development tax generated by hotel sales and the average $10 the Marlins will pay the city to buy almost all of the parking spaces.

The manager said the credit downgrade should not delay construction. Work began this month after the city borrowed $3 million from a capital fund and received a $20 million bridge loan. The Marlins hope to begin play at the new ballpark on Opening Day in April 2012.

The rating downgrade is the latest dark financial cloud over the city.

Two months ago, another agency, Moody's Investors Service, shifted the city's credit outlook from a stable to a negative position, an indication that Miami's bond rating was poised to take a hit.

Miami leaders have had to raid the city's reserves to plug budget holes, including using $54 million from the rainy-day fund earlier this year to balance the 2009 budget.

The U.S. Securities and Exchange Commission continues to scrutinize whether the city hid its financial troubles from investors over the past three years, a review with potentially far-reaching budget implications.

Last week, city leaders discussed a controversial doomsday scenario: laying off more than 1,100 employees to fill a $100 million budget hole. Commissioners have sounded wary of raising taxes to cover the shortfall.

Against this backdrop, credit agencies are under pressure across the country to redo municipal bond ratings as home sales and property taxes -- local governments' main source of revenue -- tumble in the slumping economy.

Standard & Poor's noted Miami's historical difficulty with cutting expenses, and said cutbacks probably would not be enough without structural changes to labor contracts.

``The city's financial flexibility has been greatly reduced by growing fixed costs and limited tax-raising flexibility and willingness,'' the agency's report said, adding that the absence of ``considerable expenditure reductions could lead to further credit deterioration.''


Read more: http://www.miamiherald.com/2010/06/17/v-print/1687104/standard-poors-downgrades-miami.html#ixzz0rGPlYEtM

When to Sell an Investment (from the Dolans)

Know When to Fold 'Em!
by Ken Dolan November 21, 2007 02:37 PM

We know that deciding whether or not to sell an investment can be agonizing. Selling too late or too soon is one of the biggest sources of investor regret. But to be a truly successful investor over the long term, you must not only know when to buy, you must know when to sell.

Use these guidelines to decide when it's time to take your money off the table.

1. SELL when the investment has produced the gain you hoped for. In other words, take your profits to the bank. Set a target gain on the day you buy an investment and stick to it. It's easy to become attached to a winner, hoping it will keep going up. Having a target will help take the emotion out of your decision.

2. SELL if you're losing sleep over an investment. If you're up nights worrying that you'll lose some profits if the market goes down, or worrying about whether your investment will ever go up, it's time to sell. It's just not worth it. There are plenty of other opportunities that will let you sleep well at night.

3. SELL if there is a change in circumstances - for you or the investment. Maybe there's been a change in your life. Perhaps your ability to handle investment risk has changed due to job loss or because you are getting closer to retirement.

Or perhaps the company has a management shake-up, or a mutual fund changes portfolio managers. Should you automatically sell? No, but you should monitor your investment closely for three to six months and be prepared to sell if the investment's performance is negatively affected.

4. SELL when you make a mistake. Nobody picks a winner every time. Making mistakes is part of investing. Don't let your money languish in a bad investment. Cut your losses and use that money to take advantage of other opportunities.

"How do I know when it's time to move on?" you ask. It's easier than you think. If it's a mutual fund, check your fund's performance figures against others in its group (for example, check your tax-free bond fund against other tax-free bond funds.) If your fund performs more than 20% below the average for two consecutive quarters, consider selling. If it's an individual stock you're concerned about, you know you've made a mistake if there's bad news about that specific company or the entire industry.

These reasons to sell may sound very basic and, to tell you the truth, they are. But you'd be amazed at the number of investors who skip the basics in search of more complicated strategies. That goes against one of the investment rules we live by: Don't make investing too difficult ... it doesn't have to be!
And, of course, don't forget Warren Buffet's mantra: Rule #1 is Don't Lose Money. Rule #2 is Don't Forget Rule #1!

What's in Your Retirement Account? NY Times on Dividend Stocks

June 16, 2010
Dividends Like BP’s Look Safe, Until They’re Not
By RON LIEBER

If you own BP shares and rely on the dividends for your retirement income, you now matter less than shrimp boat owners and tourism workers in the Gulf of Mexico. That’s the net result of the announcement on Wednesday that BP will suspend its dividend and set aside money for cleanup costs and the compensation of workers who have lost income because of the oil spill.

Whether the federal government was right to pressure BP to make this move (and whether BP should have buckled) is a question for the ages. But if you’re an investor in BP and rely on dividend income to pay your daily expenses, this should serve as another reminder that relying on one stock or even a handful of stocks is incredibly risky.

We’ve seen this movie before. Wachovia disappeared, hobbling many investors who counted on its dividends. Other big banks reduced their payouts drastically in the depths of the financial crisis. General Electric slashed its dividend as well.

This should have been a warning for anyone making big retirement bets on a single stock or a handful of stocks. Things that seem stable can wobble and collapse before our very eyes. And now it’s happening again.

It’s not supposed to work this way, at least in the minds of the many investors of the old school. To them, a stock that pays a dividend is a stock that is safe. “It told them that a company was still around and operating, it was in good health,” said Milo M. Benningfield, a San Francisco financial planner.

Just because a company pays a dividend now is no guarantee that it will forever, or that the company will even continue to exist. Nor is it any guarantee that the underlying stock is stable.

Still, plenty of people strap on the blinders and maintain their faith in the stocks they think they know well. A frightening article in the trade newspaper Pensions & Investments on Monday estimated that BP employees and others in the company’s 401(k) plan had lost more than $1 billion from the stock’s decline in the wake of the spill.

How can the loss be so high? Well, 29 percent of the plan’s assets were invested in BP stock as of last September. This, sadly, is yet another violation of the too-many-eggs-in-one-basket rule that company plan sponsors should have had inscribed in stone for employees — even before the Enron collapse and the resulting devastation in employee retirement accounts there.

Employees or retired employees are not alone. Devotees of white-hot companies (Apple comes to mind) simply refuse to believe that anything bad could befall the stock. Retirees reliant on dividend income may be averse to change if a stock has paid out regularly for decades. Others may have inherited a big slug of stock and may simply not know any better. Then there are those who are so tax-averse that they won’t diversify their holdings because they don’t want to give up some of their winnings to capital gains taxes.

If you know people who might fall into these categories, please do them a favor and send them to a financial planner post-haste if you can’t talk some sense into them yourself.

Or you could simply try to scare them. Very few people saw a spill of this magnitude coming, just as only a small number could have predicted a few years back that financial stocks would go from contributing 29 percent of the dividend payments of S.& P. 500 payments in 2007 to just 9 percent in 2009.

Today, consumer staples stocks contribute more than any other sector, according to Howard Silverblatt of S.& P. How might that sector or parts of it deteriorate? A prolonged terrorist campaign against large American retailers could begin, or a blight could emerge that wipes out a large percentage of the nation’s crops.

These things are unlikely but entirely possible, and they wouldn’t be a total surprise. Tempted by utilities? Mr. Benningfield suggested contemplating the remote possibility of solar flares frying the power grid.

As of Wednesday, there is now political risk to consider, too. Now that there is a recent precedent, legislators could again try to bully a company into suspending its dividends.

And if that weren’t worry enough for dividend fans, we must also rely on those same legislators to sort out our tax policy. Currently, no one pays more than a 15 percent federal tax on dividend income. If Congress does not act before the end of the year, however, investors will start paying much higher ordinary income tax rates on dividends come 2011. “Where it will wind up, no one knows,” said Kenneth L. Powell, a tax partner at the accounting firm Berdon L.L.P. in New York. Wealthier investors, meanwhile, may pay even more once a 3.8 percent Medicare tax on unearned income begins in 2013.
Everyone needs income in retirement, and dividends aren’t a bad way to get it as long as they don’t come from a single company. Again and again, we’ve seen out-of-nowhere scandals and crises and accidents bring big companies to their knees. Why, given the overwhelming evidence that these things do happen once in a while, would you not extract your dividend income from a low-cost, broadly diversified mutual fund that specializes in dividends?

The moral of the story, as always, is to diversify within each asset class you own, whether it’s dividend-paying stocks or municipal bonds or the emerging-market countries where you’re rolling the dice for big gains. Then, diversify your retirement income, too. The more sources the better, whether it’s dividend income, interest income, annuity income, rental income or periodic (and tax-savvy) outright sales of stocks or other assets.

Even this sort of diversification might not have protected you from the pain in 2008. But it can shield you from the ruin of betting too heavily on a single security like BP.

How to Send an Email to President Obama

Contact the White House
President Obama is committed to creating the most open and accessible administration in American history. To send questions, comments, concerns, or well-wishes to the President or his staff, please use the form at
http://www.whitehouse.gov/CONTACT/

Which States are in the Worst Shape (FDIC)

FDIC State Profiles are a quarterly data sheet summation of banking and economic conditions in each state.

http://www.fdic.gov/bank/analytical/stateprofile/index.html

BP and Bankruptcy (NY Times)

June 7, 2010
Imagining the Worst in BP’s Future
By ANDREW ROSS SORKIN

It seems unthinkable, even now, that the disastrous oil spill in the Gulf of Mexico could bring down the mighty BP. But investment bankers get paid to think the unthinkable — and that is just what they are doing.

The idea that BP might one day file for bankruptcy, particularly as part of a merger that would enable it to cordon off its liabilities from the spill, is starting to percolate on Wall Street. Bankers and lawyers are already sizing up potential deals (and counting their potential fees).

Given the plunge in BP’s share price — the company has lost more than a third of its value since Deepwater Horizon blew — some bankers and analysts say BP is starting to look like takeover bait. The question is, who would buy BP, given its enormous potential liabilities?

Shell and Exxon Mobil are both said to be licking their chops. And already, flinty legal minds are dreaming up scenarios in which BP would file a prepackaged bankruptcy and separate the costs of the cleanup — and potentially billions of dollars in legal claims — into a separate corporate entity.

Tony Hayward, BP’s chief executive, has insisted that his giant will weather this storm. BP is indeed a money machine: it turned a profit of nearly $17 billion last year.
“The strength of cash-flow generation in recent quarters has provided us with a balance sheet that allows us to fully take on the responsibility for the Gulf of Mexico response,” Mr. Hayward told employees last Friday.

But that hasn’t stopped the deal crowd from blue-skying potential outcomes. Here is some of the math:

BP’s costs for the cleanup could run as high as $23 billion, according to Credit Suisse. On top of that, BP could face an additional $14 billion in claims from gulf fisherman and the tourism industry. So while conservative estimates put the bill at $15 billion, something approaching $40 billion is not out of the question. After all, little about this spill has turned out as expected.

The company has about $12 billion in cash and short-term investments, but there is already a debate about whether it should cut its dividend out of fear that it could run out of money. Of course, it could sell assets or seek loans, which in this environment is still not that easy.

But all those numbers don’t account for the greatest possible threat: a jury verdict against BP. Such a verdict might push the cost of the spill into the hundreds of billions. If that happened, even BP might buckle.

This outcome might seem far-fetched right now. But on Wall Street bankers have already coined a term for it: “the Texaco scenario.”

In 1987, Texaco was forced to file for Chapter 11 because it could not afford to pay a jury award worth $1 billion to Pennzoil. That award had been knocked down by a judge from a whopping $10.53 billion. (Pennzoil successfully sued Texaco for “jumping” its planned merger with Getty Oil, in part, by moving the case to local court near its headquarters. The jury awarded triple damages.)

Imagine the BP case playing out in a Louisiana courtroom, against the backdrop of an oil-choked local economy, high unemployment and an angry public. How high can you count?

Under the Oil Pollution Act of 1990, BP’s liability for economic devastation — above the cost of the cleanup — is capped at $75 million, a number Mr. Hayward has already said he plans to blow through. But if BP is found to have violated safety regulations, which seems likely, that cap becomes irrelevant.

That’s not to say that BP won’t fight a huge judgment against it. After the Exxon Valdez spill, Exxon fought a $5 billion fine for punitive damages for two decades. It won. The fine was cut down to $4 billion, then to $2.5 billion. The case eventually made it to the Supreme Court, which found that Exxon’s actions were “worse than negligent but less than malicious,” and vacated the fine. The judgment limited punitive damages to the compensatory damages, which were calculated as $507.5 million.

“There are so many imponderables over whether its liabilities would be capped or not,” David Buik of BGC Partners in London wrote of BP. “If BP’s share price continues to fall, it could become a takeover target.”

Given that Shell and Exxon have billions in cash on hand and market values that easily exceed BP — Exxon is twice the size — bankers say now is the time to make a deal, as long as an acquirer can find a way to separate the legal exposure. That, of course, is a big ‘if.’

There are many people — besides BP — who think even discussing the possibility of a bankruptcy or takeover is silly. But looking out a few years, that may be BP’s best, last hope.

“Even with a prepackaged bankruptcy, BP’s brand is permanently tainted,” said Robert Bryce, a senior fellow at the Manhattan Institute and author of “Power Hungry: The Myths of ‘Green’ Energy and the Real Fuels of the Future.” Yes, BP is financially sound now. It is unlikely to go bust near term, he said.

“Instead, BP will spend the coming decades circling the drain, mired in endless litigation, its reputation irreparably damaged, and its finances weakened,” Mr. Bryce said.

That, if you believe the bankers, is the optimistic outcome.


The latest news on mergers and acquisitions can be found at nytimes.com/dealbook.

How to Get More from Social Security (US News & World Report)

6 ways to get more Social Security
Marriages -- even former ones -- can have significant financial advantages. Here's a look at how having said 'I do' can win you more in retirement benefits.


By U.S. News & World Report

Couples who are currently married, or who have stayed together at least 10 years, tie together their working records -- and the resulting Social Security checks -- as long as they both shall live.

In the case of Social Security payments, the result is often better for the couple than it would have been for a single person. Spouses have Social Security claiming options that single people don't. Here are a few ways couples can boost their Social Security benefits:

1. Utilize spousal payments. Spouses are entitled to a Social Security payout of up to 50% of the higher earner's check (if that amount is higher than benefits based on his or her own working record). Retired couples in which one spouse didn't work or had low earnings have the most to gain from this provision.

However, low-earning spouses must wait until the full retirement age, as the Social Security Administration calls it, to collect the full 50%. Benefits are reduced for spouses who collect before their full retirement age. (For baby boomers born from 1943 to 1954, the full retirement age is 66.)


For example, a low-earning spouse whose full retirement age is 66 would be eligible for only 35% of the higher earner's benefit at age 62. The spousal benefit does not increase above 50% of the higher earner's benefit if claiming is delayed beyond the full retirement age.

2. Claim and suspend. The low-earning spouse cannot receive spouse's benefits until the higher earner files for retirement benefits. Workers who have reached their full retirement age may apply for retirement benefits and then request to have the payment suspended. Claiming and suspending payments allows the lower earner to claim a spousal benefit and the higher earner to continue working and earn delayed retirement credits until age 70.

"This would tend to maximize their lifetime benefits and, more importantly, maximizes the survivor's benefit," says Andrew Biggs, a resident scholar at the American Enterprise Institute and a former deputy commissioner of the Social Security Administration. "You will ensure you will have a higher benefit when you need one, which is when you are a widow later in life."

Social Security checks increase by 7% to 8% for each year of delayed claiming between your full retirement age and age 70. After age 70, there is no additional benefit for waiting to collect your due.

3. Claim twice. Spouses in dual-earner marriages who have reached their full retirement ages can claim Social Security twice: first as spouses, then using their own work records. A person may choose to sign up for only the spousal benefits at full retirement age and continue accruing delayed retirement credits on his or her own Social Security record. That person can then file for benefits based on his or her own work at a later date and receive a higher monthly benefit, thanks to the delayed retirement credits.

For example, a man planning to retire at age 70 could claim a spouse's benefit based on his wife's earnings at age 66 and then claim again based on his own working record when he exits the work force at age 70. High-income couples with relatively equal earnings gain the most using this strategy, according to calculations by the Center for Retirement Research at Boston College.

4. Include family. Social Security recipients who have children under age 16 or who are disabled can secure additional Social Security payments for the child and a spouse caring for the child, even if the spouse is under age 62. Each child is eligible for up to 50% of the retiree's full benefit. However, payments to family members are capped, typically at 150% to 180% of the retiree's benefit payment. If the total benefits due to the retiree's spouse and children are above this limit, their benefits will be reduced. The retiree's payout is not affected.


5. Take advantage of eligibility for ex-spouses. A former spouse may be eligible for benefits if the marriage lasted at least 10 years. The divorced spouse must be age 62 or older and unmarried. The amount of benefits an ex-spouse claims has no effect on the benefits the worker and his or her current spouse can receive.

6. Boost the survivor's benefit. Widows and widowers are entitled to the higher earner's full retirement benefit. A surviving spouse can begin receiving Social Security benefits at age 60, or at age 50 if he or she is disabled. Benefits are reduced by up to 28.5% if claimed before the recipient's full retirement age. The surviving member of a dual-earner couple also can claim a reduced benefit on one working record and then switch to the other.

For example, a woman could take a reduced widow's benefit at age 60, then, when she reaches full retirement age, claim 100% of the retirement benefits based on her own working record. Most survivor benefits are paid to women because wives are generally younger than their husbands and live longer. A spouse can increase the monthly survivor's benefit by 60% by waiting to sign up for Social Security until age 70.

This article was reported by Emily Brandon for U.S. News & World Report.

Published June 1, 2010

Where to Find Higher Yield (Kiplingers Magazine)

Great rates in a low-yield world

BY Jeffrey R. Kosnett, Kiplinger's Personal Finance — 06/01/10

You're earning zilch on your savings. No sweat. We offer 18 investments that pay 5% or more.
A year ago you needed the nerves of a tightrope walker to buy any income security that didn't include the word Treasury in its name. Prices for just about everything else -- including corporate debt, real estate trusts and preferred stocks -- had been so pummeled that you could have been excused for thinking America was going out of business.

But, as we now know, this was a spectacular buying opportunity. Once credit markets thawed and investors gained confidence that a depression had been averted, just about every yield-oriented investment outside the comfort zone of Treasury bonds staged a rally for the ages. Over the past year, for example, junk-bond funds have gained nearly 50% on average, and the typical real estate fund has returned nearly 100%. Some preferred stocks of troubled banks have quintupled.

As a result of this remarkable rebound, high-income stocks, bonds and funds are no longer steals. But many still pay far more than the bupkis you get from money-market funds, and they outyield Treasury bonds, too. Plus, today you can buy high-yielding securities without assuming especially large risks. Continuation of a slow economic recovery should boost the fortunes of corporations and state and local governments without pushing up inflation, which would lead to higher interest rates in the bond markets -- and lower prices for many kinds of fixed-income securities (bond prices and interest rates move in opposite directions). Below, we list 18 investments that yield 5% or more, in ascending order of risk.

Taxable munis
In little more than a year, cities, states and public agencies have issued $100 billion of taxable Build America Bonds. BABs pay extraordinarily high interest rates because Uncle Sam, as part of the 2009 financial-rescue package, picks up 35% of the issuers' interest costs. BABs now yield more than corporate bonds with like maturities and credit ratings, making them great not just for IRAs and other tax-deferred accounts, but for taxable accounts as well.

Yields of at least 6% are common for new, long-term BABs. The state of Illinois, for example, just issued 25-year BABs at 6.6%. These are general-obligation bonds, backed by the state's taxing power. Standard & Poor's rates Illinois A-plus, although the state is on watch for a possible rating downgrade. If you prefer to lend to an entity that appears to be in better shape, consider a new, 30-year New York City water-and-sewer revenue bond. The BAB, rated double-A-plus, hit the market at 6.4%.

Fans of exchange-traded funds should consider PowerShares Build America Bond ETF (BAB , $25). With an average credit quality of double-A, it pays dividends once a month and yields 6.2% (all prices and yields are as of the April 9 close).

Preferred stocks
A preferred stock is closer in spirit to a bond than a common stock because a preferred dividend is almost always fixed. So if long-term interest rates rise, a preferred reacts like a bond and loses value. You also face company risk should the issuer run into trouble and suspend preferred dividends. If you can stand some price fluctuation, consider reinsurer Endurance Specialty Holdings 7.75% Preferred (ENH/PA , $24). Rated triple-B-minus, the issue is not callable until 2015 and sports a current yield of 8.1%. Under current federal law, the top tax rate on qualified dividends is just 15%. (Many stocks that look like preferreds are actually hybrid securities and aren't eligible for preferential tax treatment.)

Banks, insurers and real estate investment trusts are the most common issuers of preferreds. With a preferred-stock ETF, you can diversify into utilities and industrials. The oldest and largest among these is iShares U.S. Preferred Stock Index ETF (PFF , $39). It pays dividends monthly and yields 6.5%.

Juicy dividend payers
The overall U.S. stock market yields less than 2%, but you'll find plenty of profitable, blue-chip outfits that pay far more and are willing to maintain and even raise their disbursements. The best sources of fat dividends are utility, energy, drug and consumer-products companies. Should the economy start to weaken again, at least three of those sectors -- energy being the exception -- should hold up relatively well.

Shares of two telecommunications giants offer exceptionally generous yields. AT&T (T , $26) and Verizon (VZ , $30) recently yielded 6.4% and 6.3%, respectively. Although drug makers remain extremely profitable and have continued to pass out gobs of cash, their share prices have been stagnant for years, resulting in high yields. Our favorite for dividends: Eli Lilly (LLY , $37). Lilly has boosted its distribution 28 straight years, yet still pays out only half of its earnings. Its stock yields 5.3%.

Traded partnerships
Master limited partnerships are limited partnerships that trade on exchanges like stocks. MLPs pay no corporate taxes, so they can pay ample income to investors. On the downside, MLPs can add extra work when you prepare your taxes. Our favorite MLPs are those that own pipelines and energy terminals. They earn predictable fees and rents, rather than depend on the price of raw materials and refined fuels. Historically, these kinds of MLPs have yielded three to four percentage points more than Treasury bonds. That means they should yield 7% or higher today.

If you screen for MLPs that carry less debt than their peers yet still offer superior yields, two that stand out are Boardwalk Pipeline Partners (BWP , $30), which yields 6.7%, and Copano Energy (CPNO , $26), which yields 8.9%. Boardwalk owns three pipelines and 11 underground natural-gas storage fields; Copano operates gathering and transmission pipelines for gas producers in Louisiana, Oklahoma, Texas and the Rocky Mountains. An alternative to individual MLPs is Kayne Anderson MLP (KYN , $27), a closed-end fund that uses leverage (borrowed money) and has investments in 45 pipeline and storage MLPs (closed-end funds trade like stocks). Kayne Anderson recently yielded 7.1%, even though the shares traded at a 10% premium to the fund's net asset value. If you can buy the fund at a smaller premium -- or better yet, a discount -- pounce.

Treats With REITs
Beyond the fact that they were dirt-cheap near the end of the financial crisis, it's hard to explain why real estate investment trusts have performed so spectacularly. Most REITs own properties, such as office buildings, shopping centers, warehouses and posh mixed-use developments, that are hungry for buyers and tenants. Rents in many categories are flat or falling. REITs carry a lot of debt.

Still, you can find a few outliers that yield at least 5% and are reasonably safe. REITs that own health-care properties come to mind. Unlike offices and hotels, which are closely tied to the overall health of the economy, medical property is a growth business. And REITs own only 6% of U.S. health-related property, while they own 12% of all commercial real estate. So as health care assumes a greater share of the economy, medical REITs will have plenty of opportunities to build and buy. One of the best REITs in this sector is Health Care REIT (HCN , $46), which owns a wide range of facilities, including hospitals, nursing homes and medical-office buildings. It yields 6.0%. Another good choice is LTC Properties (LTC ), a much smaller REIT that owns nursing homes and assisted-living facilities in some 30 states and yields 5.5%.

Outside of health care, consider Realty Income (O ), a retail-property REIT that signs tenants to triple-net leases. These require clients to pay for property taxes, insurance and maintenance as well as rent. Realty Income has high occupancy and low debt, and it has paid monthly dividends for 40 years. It yields 5.4%.

One of a kind
Although it's set up as a REIT, Annaly (NLY , $17) owns no property. Rather, it borrows at short-term rates and invests the proceeds in medium- to long-term government-guaranteed mortgage securities. As long as the Federal Reserve holds short-term rates near 0% (1% would be okay), Annaly earns a bundle. And because it's a REIT, it must pay out at least 90% of its net income to shareholders. Over the past four quarters, it has paid $2.69 a share, which works out to a yield of 15.6% at the current stock price.

Normally a yield that high is a warning to stay away. But because Annaly's portfolio contains only government-backed securities, you needn't fear a rash of loan defaults. "This isn't glamorous or sexy," says Greg Merrill, a Seattle investment manager and a big fan of Annaly. "In fact, it's boring." Nothing wrong with that.

High-yield closed-ends
This category requires caution. Some high-paying closed-end funds aren't actually earning the amount they pay out (you can glean this sort of information from fund shareholder reports). Take a pass on those. However, others cover their high distributions with real earnings and income. If you invest at or below net asset value -- a wise idea when buying any closed-end -- you get good income at a fair price.

MFS Special Value Trust (MFV , $7) invests in an unusual combination: junk bonds and high-yielding stocks. It doesn't use leverage to enhance returns, but that doesn't mean it's a low-risk fund. It lost 35% on assets in 2008 and then gained 58% in 2009 (because investors become more enthusiastic about closed-ends in up markets and tend to unload them in down markets, the swings in performance based on share price were even more dramatic). The fund pays dividends every month from capital gains and interest income. It recently traded within a few cents of its NAV and is on track to distribute 69 cents a share this year. At the current price, that puts the yield at 9.5%.

Strategic Global Income (SGL , $11) has what's known as a managed-distribution policy. The fund, which doesn't use leverage, pays out 7% of NAV each month, using interest income and capital gains to cover the distributions. It's a go-anywhere bond fund, so the managers explore all sorts of investments, but their record has been decent over the past few years. The fund lost a modest 11% during the 2008 disaster, then staged a powerful 40% advance in 2009. The shares trade at a 10% discount to NAV, which explains why they yield 7.8% -- more than the distribution rate.


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All Contents © 2010 The Kiplinger Washington Editors

Florida Retirement System: Veto for Changes to FRS DROP (floridacapitalnews.com)

Article published May 29, 2010
TOP STORY
Crist refuses to cut DROP for state workers
By Bill Cotterell
Florida Capital Bureau

Gov. Charlie Crist refused Friday to slash interest earnings on government-employee pensions in the Deferred Retirement Option Program, saying lawmakers unfairly popped the change into the budget late in the session.

"It's like Gov. Lawton Chiles used to say: 'This time the people win,' only this time, the people are the state employees," said state Rep. Alan Williams, D-Tallahassee. "That was the right decision by the governor."

DROP is an option for state, county and local employees who participate in the Florida Retirement System.

Williams and Sen. Al Lawson, another Tallahassee Democrat who voted against the change last month, were intrigued by the political implications of the veto. Crist, a former Republican now running for the U.S. Senate as an independent, endeared himself to state employees last year by vetoing a 2-percent salary reduction for those earning more than $45,000.

"He's going to get some state-employee support," said Lawson. The Senate minority leader met with Crist early this month and lobbied him to veto the interest cut.

The DROP program allows retirement-eligible employees to start collecting their pensions while continuing to work for up to five years. The monthly pension checks are banked at 6.5 percent interest, but the Legislature voted to cut that to 3 percent for those who enter DROP after July 1.

There's been a flood of DROP applications in the past two months, to beat the cut that now won't come.

Crist said the change was inserted in a joint committee report on the budget "with little or no opportunity for discussion or debate. Changes to employee retirement accounts should be vetted through the normal committee process to avoid unintended consequences that may occur when rushed through the process."

The Bill (HB 5607) passed the Senate 32-6 and the House 78-42. That's more than enough to override a veto in the Senate, but House leaders would have to switch two "Nay" votes to get the required two-thirds majority if an override vote is taken and all members showed up.