This article is written by InvestorPlace’s Neil George.
Is the stock market the best place to be over the long haul? That’s the popular wisdom, to be sure. But this theory also assumes that over the long term, you will earn an average of 7% by investing in stocks.
In recent years, that has devastated many investor’s retirement portfolios. In fact, for the last 10 years, investors lost nearly 10% by sticking with the stock market.
Now sure, you want your money to grow. But what if you could earn that 7% without having to worry about the stock market’s ups and downs? Here are seven picks that will pay you 7% or more to own them, and have proven themselves to keep paying investors, regardless of what the economy or the markets might throw at them, even the fiascos of the past year.
They fall into three categories: funds, mini-bonds and preferreds.
Investment #1 – AllianceBernstein Global High Yield Fund
I’ll start with a tried-and-true bond fund that invests in government and quality corporate bonds from around the world: the AllianceBernstein Global High Yield fund (AWF). This fund not only gives you a nice yield, but also a hedge against what the dollar or the U.S. economy might do in the years to come.
AWF currently yields over 9.7%. And the average annual return for Alliance has been over 14% for the past 10 years.
Investment #2 – AT&T Mini-Bond
Next up is a tried and true mini-bond from mega telephone utility, AT&T. This AT&T mini-bond (KTBB) has a yield of 7.8%. And like the AllianceBernstein fund, it keeps paying over the years, giving investors an average annual return of over 9.4% over the past five years.
Investment #3- Dayton Power and Light Mini-Bond
I like electric power utilities that run nice, simple regulated businesses. One of my recommendations is right in the heartland of the U.S.: A Dayton Power and Light mini-bond (MJT), which pays you a nice yield of 8.1%. It turns out keeping the lights going in Ohio also keeps investors’ portfolios going: MJT has generated an average annual return of over 8% over the past five years.
Investment #4 – National Rural Utilities Cooperative Finance Corporation
Second is this segment is a National Rural Utilities Cooperative Finance Corporation mini-bond, which helps to fund regulated power companies in 49 states and the District of Columbia. Its mini-bond paying a dividend rate of 6.75% (NRN) trades at a discount to generate a nice yield of 7%. And like the others, this mini-bond has given investors a nice, simple, steady average return of over 7.8%.
Investment #5 – Goldman Sachs Mini-Bond
The last in this group is a Goldman Sachs mini-bond (JZS). You might have caught this bank’s mega returns over the past quarter. While those numbers might be outsized, the returns of the mini-bonds from Goldman are more stable, with a nice dividend yield of 7.26%.
The last two of the 7 picks come from the very sure and simple preferred stock market. Halfway between a bond and common stock, these preferreds have stated dividends that can’t be cut and even if delayed, have to be paid to shareholders.
Investment #6 – Regions Financial Preferred
On the bank front, Regions Financial has a 8.875% preferred (RF Z) that keeps chugging along, even with all of the ups and downs in the financial and banking markets. Trading at a nice discount, it currently pays a yield of over 10%, and since its coming to the market, the returns for investors have averaged more than 10% per year.
Investment #7 – Duquesne Light Preferred
And last up is another power utility serving southeastern Pennsylvania. Duquesne Light runs a regulated utility business that has major investment from a collection of private equity and funds out of Australia. The Duquesne Light 2.1% preferred (DQUEN) yields over 7.2%. And for the past five years, it has paid even more, averaging over 8.7%, nice and sure.