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100 Years of Guaranteed – and Above-Average – Income

On Tuesday, I shared hard evidence that many investors keep looking for safety and income in all the wrong places. Namely, high-yield bonds.

Well, it turns out another big group of investors simply wants safety.

Case in point: Yesterday, the Treasury Department auctioned off $35 billion in five-year notes, yielding just 0.71%. Moreover, the bid-to-cover ratio checked-in at 2.92. Meaning almost three people were bidding on each bond being offered.

We need to reprogram our brains, folks. Giving the U.S. government our money for five years in return for 0.71% interest is not an investment. It’s robbery. Literally. After we factor in inflation, the returns are negative.

I don’t care if you’re the most nervous Nellie on the planet. Better options exist.

In fact, today I’m going share five ultra-safe opportunities virtually guaranteed to pay us up to 10% per year for the next 100 years. (No, that’s not a typo.)

So let’s get to it…

Safety Doesn’t Mean Sacrificing Yield

I get that the global economic outlook remains uncertain, thereby increasing the need for safety. But this isn’t the world’s first, or last, slowdown. Nor is it an excuse to sacrifice a fair yield in the name of “playing it safe.”

With that in mind, I ran a screen for companies committed to paying dividends through thick and thin, including the Great Depression.

You’ll recall another tenet of our dividend strategy is insisting on companies that consistently increase their dividend payouts. So I also screened for companies that increased their dividend for at least 10 years in a row.

Lastly, I eliminated any companies with current yields below 3%.

The end result? A short-list of opportunities that promise to pay us for the next century. And pay us more and more each year, too. No matter what happens in the world.

If we supplement the dividend payments with premiums from writing covered calls, which remains the most overlooked income-boosting strategy, we can easily push our yields as high as 10%. Without sacrificing an ounce of safety.

Someone’s bound to point out that the list is comprised of nothing but “boring” companies. Four utility operators and a consumer staples company. Who cares?!

Excitement should be a requirement for our nightlife, not our income investments.

As I’ve outlined before, boring businesses make money. Gobs of it. They benefit from super steady demand, too, which enables them to return the extra cash to shareholders (i.e. – us). And that’s all that matters here – reliable and above-average income.

Bottom Line: Think twice before you sacrifice safety for yield. It’s not necessary.

Safe (and high-yield) investing,

Louis Basenese