Dear Mr. Berko: I would like to invest in a few high-yielding stocks with dividend yields better than 10 percent. My stockbroker recommended some Canadian energy stocks like Harvest Energy, Provident Energy Trust and Penn West Energy. Please comment on these issues. If you feel there are other issues to look at, I'd appreciate some recommendations from you. I know this is a tough market, but there have to be some good, high-yielding, safe issues out there. — N.W., Joliet, Ill.

Dear N.W.: I don't like the Canadian energy stocks for a very simple reason. Most have taken in substantial investment capital for exploration based upon oil trading at $100 to $120 a barrel. Now that oil is trading at $40 to $45, those Canadian energy firms will be hard-pressed to meet their promised returns. Even Venezuela, Mexico and some of the oil emirates are feeling the pinch. They borrowed billions for pipelines, drilling equipment and infrastructure predicated based on oil selling at $120 a barrel and their investors are sweating. That kind of makes me feel warm and fuzzy inside.

It's an understatement to say, "This is a tough market." It's also a volatile market. I believe we can expect lots of days when the Dow posts gains and or losses of 400 or 500 points or more. However, I think the Dow Jones industrial averages might have reached their low when they touched the 7,700 level in October. If not, the Dow came within a couple hundred points of its low. In other words, I think that 7,500, more or less, could be the bottom — an uncommon crisis notwithstanding.

Consequently, there are some great issues in today's market that could still move 15 percent to 25 percent lower. There are some compelling stocks in today's market that could have significantly less exposure. They are primarily income-oriented issues. I'm comfortable owning them at their current prices because they've fallen so far from their 12-month highs that any further downside should be comfortably cushioned by their high-dividend payout and relative dividend security. The following are some of my favorites:

Weingarten Realty Investors (WRI-$17.40) is the largest real estate investment trust on the New York Stock Exchange. WRI owns 386 properties in 13 states, including 320 neighborhood shopping centers and 66 industrial properties. WRI is extremely diversified and the largest of its 5,500 tenants contributes only 2.8 percent of its revenues. WRI recently traded as high as $40 and I believe the $2.10 dividend, yielding 22 percent, may be reduced.

BT Group (BT-$20) has transformed itself from a highly regulated provider of basic telephone service in the United Kingdom to a full-fledged supplier of information and communications technology services. This $42-billion-revenue company has a 9.6 percent net profit margin. It recently traded in the high $60s and the $2.97 dividend yielding 22 percent looks secure.

Crosstex Energy Inc. (XTXI-$3) traded in the high $30s during the last 12 months and recently lowered its dividend from 38 cents to 32 cents a quarter. The current $1.28 dividend yields 42 percent. XTXI connects wells of natural gas producers to its gathering system to purchase production. It then processes the natural gas for resale to utilities and other users. The shares currently trade a few pennies above book value and cash flow per share is a strong $4.65. I think the reduced dividend is secure.

Gladstone Capital Corp. (GLAD-$7.95) is a business development company that earns high income by investing in debt securities like senior notes, senior subordinated notes of established private businesses that are backed by Leveraged Buy Out Funds or Venture Capital Funds. GLAD, which traded as high as $20 in the last year, pays a $1.68 dividend, which yields 23 percent.

Duke Realty Corp. (DRE-$7.80) is a real estate investment trust with 131 million rentable square feet in 22 major cities. DRE controls 7,700 acres of land potentially representing another 113 million square feet of future development. The outlook for 2009 isn't sanguine. Most on Wall Street believe the $1.94 dividend, which yields 29 percent, might not be secure.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at [email protected]. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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