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BIG YIELD HUNTING: BUYING INTO HIGH, SAFE, GROWING YIELDS WHILE OTHERS CHASE JUNK

BIG YIELD HUNTING: BUYING INTO HIGH, SAFE, GROWING YIELDS WHILE OTHERS CHASE JUNK. ROGER S. CONRAD MARCH 2011. A THIRD YEAR OF GAINS?. THE INCOME INVESTING BULL MARKET: MARCH 2009--?? RISING EXPECTATIONS LOWER YIELDS BUT LOWER RISK. MANY POSITIVES. CORPORATE RATES STILL VERY LOW

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BIG YIELD HUNTING: BUYING INTO HIGH, SAFE, GROWING YIELDS WHILE OTHERS CHASE JUNK

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  1. BIG YIELD HUNTING: BUYING INTO HIGH, SAFE, GROWING YIELDS WHILE OTHERS CHASE JUNK ROGER S. CONRAD MARCH 2011

  2. A THIRD YEAR OF GAINS? • THE INCOME INVESTING BULL MARKET: MARCH 2009--?? • RISING EXPECTATIONS • LOWER YIELDS BUT LOWER RISK

  3. MANY POSITIVES • CORPORATE RATES STILL VERY LOW • LITTLE REFINANCING RISK • Q4 RESULTS GENERALLY SOLID • INDUSTRY STRENGTHENING • DIVIDEND GROWTH RETURNS • MANY DIVIDEND-PAYING STOCKS STILL BELOW THE EARLY 2008 HIGHS

  4. GROWING NEGATIVES • HIGHER EXPECTATIONS = ROOM FOR DISAPPOINTMENT • SOME INDUSTRIES STILL WEAK • INFLATION RISK • DEFLATION RISK

  5. TIME FOR MANAGED YIELD • FOCUS ON TOTAL RETURN • STICK TO STOCKS • SHOP FOR DIVIDEND GROWTH • KNOW WHO’S WRITING THE CHECKS • BALANCE AND PARE BACK WINNERS • BUY QUALITY WHEN OTHERS ARE DISAPPOINTED • AVOID THE HIGHEST YIELD

  6. POWERING UP • ELECTRICS’ GREAT DELEVERAGING • THE SUREST TREND • STILL LAGGING: DJUA OFF -25% • CAPITAL SPENDING + FAVORABLE REGULATION = BIG TOTAL RETURNS • EXC--4.9%, TEG--5.4% • CALIFORNIA UTES: SRE--3.6%

  7. GAS’ BULL MARKET • YIELDS 5-8% • PLAYING VOLUME = SHALE • NEW PROJECTS CONTRACTED FIRST • DIVIDEND GROWTH ACCELERATING • MLPS: TAX ADVANTAGED--KMP--6.2%, EPD--5.7% • CANADA: PVX--6.7%, PBNPF--7.3%

  8. LOOKING NORTH • YIELDS 8-10% • 2011 CONVERSION/TAXATION DONE • DIVIDENDS: GROWING AGAIN • CANADIAN DOLLAR: HARD CURRENCY • ADN (ACAZF)--7.7% • KEY (KEYUF)--5.2%

  9. SUPER PRODUCERS • YIELDS: 5-8% • UP: OIL, NGLS • REFINING MARGINS IMPROVE • GRABBING GAS CHEAPLY • Eni (NYSE: E)--4.2% • Enerplus (NYSE: ERF)--7.3%

  10. HIGH YIELD TELECOM • YIELDS 6-9% • GLOBAL CONNECTIVITY EXPLOSION • BIG CASH FLOWS = HIGH YIELDS • FEAR OF BIG GOVERNMENT = LOW PRICES AND LOW EXPECTATIONS • BIG WIRELESS: VZ--5.4% • RURAL CASH COWS: FTR--9.4%

  11. BIG YIELDS DOWN UNDER • YIELDS 5-10% • AUSTRALIA’S ASIAN CONNECTION • AUSSIE DOLLAR: A HARD CURRENCY • FLOODS DEPRESS OUTPUT AND VALUATIONS • LEIGHTON HOLDINGS (ASX: LEI, OTC: LGTHF)--5.0% • TELSTRA (ASX: TLS, OTC: TLSYY)--10.6%

  12. WHERE THEY AIN’T • YIELDS 5-8% • BIG PHARMA: BMY--5.0% • SMALL BANK PROFITS: FNFG--4.6% • PROFITABLE PROPERTY: WRE--5.9% • SHORT DURATION OPEN END BOND FUNDS: VFIIX • PROVEN JUNK: NTHEX • TEF--5.8%

  13. WHAT TO AVOID • LONG-TERM BONDS AND FUNDS—NO YIELD ADVANTAGE, MORE RISK • CARRIED INTEREST MLPS • MORTGAGE REITS • MOST CLOSED-END BOND FUNDS • MUNIS YOU DON’T KNOW • THE HIGHEST YIELD

  14. FOR MORE • UTILITY FORECASTER www.utilityforecaster.com • www.utilityandincome.com • CANADIAN EDGE www.canadianedge.com • www.mlpprofits.com • www.mapleleafmemo.com • user name: carnival • password: feather

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