If you think your Social Security benefits are going to help you in retirement, think again. You probably believe in the Tooth Fairy and Santa Claus too. Read on.

There is now a permanent disconnect between the owners of a publicly traded company and the company. What should Investors do? Read on.

The Stock market was up 26.5% in 2009 (S&P 500 Stock Index). But this was without the benefit of earnings. Who’s likely to grow earnings in 2010? Read on.

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INCOME 5X THE S&P!

Do you own stock market investments that pay paltry dividends?

The dividend yield of the S&P 500 Stock Index on December 31, 2008 was 3.14%, and the average for the first eight years of this decade was 1.6%, up slightly from its all time low of 1.14% in 1999.

At the current yield (8/31/2009) of 2.1% it will take 48 years to recover your investment! And the current yield is not due to companies paying you more. In fact, many are cutting dividends. The yield has increased because of the price decline in the S&P 500 index. So, you are not getting more income from owning the S&P Index or a mutual fund that mimics the S&P Index.

However, it may surprise you to know corporate dividends have been expanding rapidly, as you will see in the schedule and graph below.

Do You Need More Income?

More income is available in many strong, creditworthy, and safe stocks & bonds. Investing in safe, high yield stocks and bonds is easy. Let me show you. The portfolios we are building currently provide income of more than 5x the level of income provided by investing in the S&P Index.

Corporate dividends are tracked by the U.S. Bureau of Economic Analysis (BEA.gov) and show a continuous and sustained increase. The following schedule compares all corporate dividends with the dividends paid by those companies in the S&P 500 Index.

The S&P 500 Stock Index, which covers about 77% of the US stock market, currently pays a dividend yield of 2.1%. In 2008, the S&P 500 Index companies paid out dividends totaling $247 billion, the same level as 2007.

Dividends Paid

Individuals received $834 billion in dividends in 2008, an increase of 6% over 2007 dividends. The S&P dividends were just 30% of the total. So, dividends are being paid and are available, but are not coming from the S&P 500 Stock Index companies.

While total S&P dividends remained the same for the last two years, total dividends paid INCREASED even in the current deep recession!

Is this is just a temporary event? The 20 year chart below shows this is a continuing trend. In 1988 S&P dividends were 52% of total dividends paid. This percentage has dropped steadily over the past twenty years and now stands at 30%.

While S&P dividends have increased nearly four fold over the last 20 years, total dividends paid have increased seven fold. You will note the difference has widened in the last several years.

Total dividends have grown from $130 billion in 1988 to $834 billion twenty years later, a compound growth rate of 9.7%. During the same time, S&P dividends have gone from $67 billion to $247 billion, a compound growth rate of 6.7% per year.

Except for 2008, there has been a steady decline in the S&P yield over the last twenty years. And the payout ratio of 40% in 1988 has declined to 34% last year.

The pattern is clear… this is a long term trend for steady growth in total dividends. But these dividends are not coming from the companies in the S&P 500 index. And S&P Index companies distribute a smaller portion of their profits and low dividends relative to their stock price.

So where are these High-Yield Investments?

I have shown you the absolute level of dividends and its rapid growth. These dividends come from two sources in addition to the dividends paid by the S&P 500 Index… private companies and public companies not in the S&P 500 index.

There is no information that tells us how much of the available dividends come from private companies, which is not available to us, and public companies which is.

But I can tell you there are plenty of public companies offering lush dividends. I have constructed a universe of established and creditworthy companies that pay high dividends. This universe is more than 700 companies. And when I add in the bond universe, we have an investment universe of over 1,000 companies.
 
Public companies are in two categories: stable companies in mature industries, and companies with special tax characteristics, such as real estate investment trusts (REITs), publicly traded partnerships (PTPs), and royalty trusts.

These two categories give us a large universe of about 700 potential investments, 200 more than contained in the S&P 500 Stock Index. In addition, I will add high yield corporate bonds to the portfolio when I feel it is appropriate.

Our universe allows me to easily build a broadly diversified and stable high income portfolio.

My objective is to provide high levels of income to individual investors.

The return objective of the Panhandle High Income Portfolio is 15% a year, made up of 10% income and 5% capital gains. Currently the portfolio yields 11.3% which is 5x more income than the S&P 500 Index.

One hundred thousand dollars invested in this portfolio will pay you over $12,000 every year. Over time your payments will increase.

The following is a summary of our High Income Portfolio:

As you can see, this is a broadly diversified portfolio with exposure to six different sectors. The portfolio has stability with investment in utilities, healthcare, and retail. The finance investments are not banks as there is just too much uncertainty right now. And we have a bond and preferred stock investment that give us rock solid income and potential price appreciation.

The expected return from the Panhandle High Income Portfolio is two thirds income (10%) and one third capital gain (5%). The reason the capital gain is modest is because our portfolio companies distribute their profits to us, the shareholders. This means our portfolio companies grow slowly. This is OK because high dividends allow you to grow your portfolio more rapidly.

Do You Need More Income?

If so, you have come to the right place. I build and manage high income portfolios. The high income portfolio illustrated above is made up of safe and growing investments that pay you five times the income of the S&P 500 Stock Index. Full Details of Portfolio