 | | 
|
| | Monday, December 8, 2008 | Volume 2, Issue #45 | |  Published weekly, the TopStockAnalysts Digest is loaded with stock picks, trading ideas, market commentary, and educational guidance designed to help you become a better investor. To ensure uninterrupted delivery of this newsletter, please follow these simple instructions.
| | | | Today's Top Stock Picks | |  This Company Has Pumped Its Dividend Up By +40.4%
Magellan Midstream (MGG) does more than pump petroleum products through its pipelines. It has grown its dividend by over +40% in the last three years and delivers a steady double-digit yield. Read More. . .  Balanced Income With a 17.3% Yield
Trading at a historic discount of -22.1%, this closed-end fund holds a diversified portfolio of stocks and bonds. And investors locking in now could receive an additional appreciation bonus once the discount starts to narrow.
Read More. . . | | | The Next Investment Boom Famed venture capitalist Ray Lane made billions by betting on tech breakouts like Google, Amazon and Netscape before Wall Street did. Now he's found a megatrend he says could be "10 times bigger."
Get the names of 3 stocks that are positioned to gain the most from what some are calling the "Next Investment Boom." Click here for your free report from The Motley Fool | | . | | Market Update | | It's not often that a weekly decline of -2% in the major averages could be viewed as positive, but this just might be one of those times.
After all, the week began with a demoralizing -8% plunge on Monday that short-circuited a nice five-day winning streak. The Dow surrendered almost 700 points and suffered its fourth largest point drop on record. The fact that three of those four declines have occurred over the past couple months should tell you what kind of year we're having. Unfortunately, a steady flow of ominous economic headlines appeared to set the tone for even further losses in the days to come.
First, the National Bureau of Economic Research confirmed what many have long suspected, officially declaring the U.S. to be in the throes of a recession. In fact, the agency concluded that our economy has been shrinking since last December, which would already make this recession one of the longest in the post-war era.
As if to validate those findings, a key barometer of health in the service sector slipped well below already pessimistic predictions -- suggesting that hoteliers and other service-based firms continue to struggle. Meanwhile, there have been plenty of other discouraging signs: rising mortgage delinquencies, plunging factory orders, anemic auto sales, etc. etc.
But the most alarming data point was unveiled on Friday, when we learned that a staggering 533,000 workers lost their jobs last month.
However, following the carnage of the past few months, it's pretty clear that a rapidly deteriorating economic picture has already been priced into the market. So rather than cower under the dismal numbers, investors actually shook them off and went on a buying spree instead -- a classic sign of a market that is in the process of bottoming.
If bearish financial headlines have lost their shock value and don't automatically trigger knee-jerk sell-offs, then we're one step closer to a recovery.
In any case, balanced funds that hold both stocks and bonds can be great all-weather investments. And below, High-Yield International editor Nick Lanyi gives a sunny forecast for one of his favorites, Evergreen International Balanced Income Fund (NYSE: EBI, $10.10). The hand-picked portfolio features some of the most attractive income-producing securities from around the world -- and it's trading for just $0.80 on the dollar.
Also in today's digest, High-Yield Investing editor Carla Pasternak has turned up another promising idea for income investors. As you'll read below, Magellan Midstream Holdings (NYSE: MGG, $13.16) has boosted its distributions at a powerful +40% annual pace over the past few years and now offers a hefty yield approaching +11%. Better still, ongoing expansion projects could lead to even more generous payouts in the near future.
Good Investing! 
-- Nathan Slaughter
Co-Editor
TopStockAnalysts Digest
| | | . | | | This Company Has Pumped Its Dividend Up By +40.4%
by Carla Pasternak, Editor -- High-Yield Investing | | | Through its wholly owned Magellan General Partner, which in turn owns Magellan Midstream Partners (NYSE: MMP), Magellan Midstream Holdings (NYSE: MGG, $13.16) operates pipelines and storage terminals to ship refined petroleum products and ammonia from the Gulf of Mexico to markets in Illinois, Minnesota, and Colorado.
Its ownership position entitles MGG to receive 2% of the cash distributed by the operating company MMP, together with increasing percentages of any incremental cash distributed by MMP. Structured as a limited partnership, MGG must pass along most of this investment income to shareholders.
In other words, MGG's shareholders are the prime beneficiary of any dividend increases by its operating company. Not only do they get a piece of MMP's dividends, they also get a bigger piece of the rising dividend every time the dividend is boosted.
For example, when operator MMP announced a quarterly dividend hike earlier this month that equated to +9% year-over-year, parent MGG chimed in with a +22% raise. The latest increase brings MGG's quarterly payout to $0.354, bringing the yield to 10.8% of today's price.
Over the past 12 months, the company has paid out $1.26 per unit in dividends on $1.32 per unit in earnings, giving it a 96% payout ratio. Most of the dividends are considered tax-deferred return of capital, so the stock is best held in a taxable brokerage account.
MGG's per-share earnings have grown an average +40.4% over the past three years through 2007, while the annual payout rate has soared +240% since the company initiated dividends in 2006. Profits are tied to the volume of petroleum products shipped through the company's pipelines and stored in their terminals. Reduced demand for refined products could affect profits, but tariff increases pegged to the Producer Price Index should help offset some of the earnings shortfall.
Growth will also be driven by ongoing expansion projects and acquisitions. And given the company's strong balance sheet, it isn't planning on going to the capital markets to raise cash for these projects. CEO Don Wellendorf of Magellan Midstream (MMP) told shareholders the partnership will use internally generated cash flow to fund its slate of expansion projects and draw upon its existing $550 million line of credit to take advantage of potential acquisitions.
While we are inclined to sit tight until the dust settles on Wall Street, some opportunities are extremely enticing. MGG is one of them. This cash-rich dividend grower is still trading near its 52-week lows. For income investors willing to withstand some inevitable volatility in order to capture a double-digit yield, MGG offers excellent long-term value. | | | Capture a 10.3% Yield Backed by the Government Savvy income investors can't afford to overlook one security that as stood the test of time as a safe haven for those looking to shelter assets -- preferred stocks. In fact, preferreds tend to be far more resilient than common stocks in bear markets like this, and, as a bonus, many of these securities carry rich, double-digit yields.
One preferred stock in particular is yielding 10.3%... has a "AAA"-rated portfolio backed by the federal government... and has even outperformed the S&P 500 by +44.2 percentage points over the last year! Read the full article here | | . | | | | For those looking to bottom-fish for high-yield stocks and bonds, but with the diversification and safety of a managed portfolio, Evergreen International Balanced Income Fund (NYSE: EBI , $10.10) is a good option. The closed-end fund's management team at Evergreen Investments is solid and experienced; the equity portfolio of the fund is run by Francis Claro, who has been working in the investment management field since 1986. The fixed-income portion is managed by Anthony Norris and Peter Wilson, who, along with their team, have over 30 years of combined experience in fixed-income securities.
The fund's balanced approach -- a 60/40 mix of stocks/bonds -- limits volatility and boosts income, as bonds are higher-yielding and carry less downside risk or upside potential compared with stocks. To boost yields further, the fund's managers write calls on international indices against about half of the equity portfolio. While this limits upside in rising markets, it bring in copious amounts of cash for dividend payments.
The fund's top sectors include utilities (13% of portfolio) and telecom stocks (11%) -- steady eddies that tend to hold their own during recessions. One of the fund's top holdings is France Telecom, one of my favorite foreign dividend plays. Other holdings include bonds issued by Norway, Mexico and Canada, coupled with stocks like Unilever and Nintendo. No single holding makes up more than 3.5% of the portfolio.
EBI is diversified geographically, which limits the risk of a market meltdown in any one country. The top country weightings are the U.K. (17%), France (11%), Germany (8%), Norway (7%) and Canada (5.5%).
The fund currently trades at a huge discount to net asset value (NAV) of -22.1%. That means you're buying $1.00 worth of portfolio holdings for only $0.78. Even if the underlying portfolio remains flat, you could profit nicely from the discount narrowing -- not to mention the hefty 17.3% dividend yield.
The fund has paid a monthly dividend of $0.1458 per share since December 2007. Given the current environment, it's likely some of the fund's holdings could cut their dividends in the coming months. That said, it's hard to envision a scenario where the fund doesn't generate a double-digit yield over the next year, thanks to its focus on relatively stable sectors.
If you're looking for a high-yield, one-stop fund that gives you a diversified mix of foreign stocks and bonds, the Evergreen International Balanced Income Fund fits the bill right now. This isn't for the meek at heart, as some of its holdings almost certainly will cut their payouts in the coming year. But even if they do, that doesn't necessarily mean EBI will, and the fund's total dividend yield probably will remain in the double digits. | | | . | | Additional Investing Ideas | | | | | . | | Investor Trivia -- The World's Strongest Banks | | Which country's banks were rated the strongest in the world in November 2008 by the World Economic Forum?
A.) Aruba
B.) Brazil
C.) Canada
D.) Denmark
E.) England (Please click on one the links above. After you make your choice, we'll show you the correct answer on our web site.) | | | . | | Featured Topic -- Taking a Cue from the Richest Woman in the World | What can a woman born in New England in 1834 teach us about investing in today's volatile investing climate?
Plenty.
In today's issue, we'll take a brief glimpse at the career of "The Witch of Wall Street" and consider where she might look for the best investments in this downturn.
Hetty Green was one of the savviest investors of all time. Her steely resolve, unwavering discipline and glacial patience are every bit as important to market success today as they were a hundred years ago.
And yet Hetty -- once the richest woman in the world -- remains mostly a footnote to financial history, a curious bit of eccentric Wall Street lore. That's too bad. There's much to be learned from her.
Hetty's father, "Black Hawk" Robinson, was a notoriously hard-driving New Bedford whaling magnate, and he imbued his daughter with his business acumen and insight into the darker side of human nature. His was a not a rose-tinted, sentimental perspective. Black Hawk taught his daughter never to owe anyone anything, not even a kindness. Hetty wasn't merely tough, she was ruthless. "The Witch of Wall Street" once foreclosed on a church. When she died in 1916, she was worth $100 million, a fortune to rival the richest men of her day.
Hetty played rough in a rough game. The unregulated markets -- where Hetty was absolutely the only woman -- were a dangerous environment for the most seasoned and scurrilous traders. Even the most cunning operators flamed out from time to time. Not Hetty. She routinely beat the robber barons at their own game.
Important Note: Because this article is fairly extensive, we could not include it in its entirety in today's newsletter. You can find the remainder of this article on our website. Please visit this link to continue reading this article. | | | . | | Free Investing Resources  | Free One-on-One Training with Award-Winning Forex Software. Receive this free guide, containing everything a beginner currency trader needs to know before entering the fast-paced forex market -- from how to choose a dealer to placing an order. GFT is a worldwide leader in online currency trading. Take advantage of this offer. | |  | Get 10 Free Issues of Investor's Business Daily and 2 weeks of Investors.com -- During your trial, you'll get alerts to top-rated stocks near a buy point. And you can diagnose your stocks with unbiased ratings in IBD Stock Checkup.
Sign up now! | | |  | How to Capture a 10.3% Yield Backed by the Federal Government -- Join Global Dividend Opportunities today and become part of a growing brotherhood of like-minded income lovers who share our love for reliable investments ideas that deliver above-average income and strong capital gains. Read this article now. | | | . | |
Good investing in the coming weeks! TopStockAnalysts
http://www.TopStockAnalysts.com
839-K Quince Orchard Blvd.
Gaithersburg, MD 20878-1614 P.S. -- If you're not already a subscriber to one of StreetAuthority.com's premium investing newsletters, which include a wealth of additional information and specific investing guidance that you won't find anywhere else, then please visit the following page to learn more: http://www.StreetAuthority.com/subscribe.asp | | | You are receiving this newsletter because you visited us at TopStockAnalysts.com and registered to receive our complimentary biweekly investing newsletter -- TopStockAnalysts Digest. If you feel you have received this issue in error, please follow the instructions below to unsubscribe or contact us by visiting our web site. If you are interested in advertising in this newsletter, or on our web site, please visit this link. This message was sent by an automated message delivery platform. Please do not reply to this email address. Any messages sent to this address will be automatically deleted. We sincerely hope that you benefit from your subscription to this complimentary newsletter, and we're willing to do whatever it takes to keep you as a satisfied customer. However, if at any time you wish to discontinue your subscription, you can do so by simply visiting this link and confirming your request, or by calling (301) 216-2005. Please note that TopStockAnalysts is not a registered investment firm or broker/dealer. Readers are advised that the material contained herein should be used solely for informational purposes. TopStockAnalysts does not purport to tell or suggest which investment securities members or readers should buy or sell for themselves. Site users should always conduct their own research and due diligence and obtain professional advice before making any investment decision. TopStockAnalysts will not be liable for any loss or damage caused by a reader's reliance on information obtained in this newsletter or on our web site. Our readers are solely responsible for their own investment decisions. The information contained herein does not constitute a representation by the publisher or a solicitation for the purchase or sale of securities. Our opinions and analyses are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in this report should be independently verified with the companies mentioned. The editor and publisher are not responsible for errors or omissions. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities discussed in this report or on our web site. | Copyright 2001-2008 TopStockAnalysts. All rights reserved.
Unauthorized reproduction or distribution is strictly prohibited.
|
The conservative company that has paid dividends for 68 straight years ...
