Earn More Dividends

Whenever our staff struggles to come up with a clever title for one of our stories, some wag invariably pipes up, “Just use the word dividends, and people will read it.”

We’re only half joking. Dividends is a magic word in a zero-rate world. We get a steady stream of questions from readers such as Mary Niedermeier, who asks, “What are the best ways to invest in the lowest-risk/highest-yield dividend-earning investments? What about utilities?” Andy Levy laments, “It almost doesn’t matter which bond or bond fund we buy—it will be either a low-yield opportunity or a loss in price if interest rates rise. Why add bonds just for the sake of making your asset-allocation pie chart look pretty?”

For Mary, Andy and everyone else starved for income, we serve up a full plate this month. We introduce the Kiplinger Income 25, our choices for the top 25 investments that reliably deliver yields of at least 4% with manageable risk. Mary will find four dividend-paying utilities, one of which—Telefónica—pays a stunning 11.7% semiannually. For Andy, there’s a lineup of open- and closed-end bond funds and ETFs with payouts that leave Treasury yields in the dust. Plus, the list includes real estate investment trusts and energy-income trusts and partnerships. (You can view the full list in print on page 25 of the magazine or download the PDF for just $4.99.)

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The guiding light behind the Kip Income 25 is senior editor Jeff Kosnett, our go-to guy on fixed-income investments and author of our Cash In Hand column.

Several of Jeff’s selections are members of the Kip 25, a list of our favorite no-load funds that tilts toward stocks. But there are plenty of surprising newcomers—among them Aberdeen Asia-Pacific Income, which invests in high-yielding Australian government bonds that you can’t buy directly (and which was recently yielding 5.7%).

And Jeff used his expertise to discriminate among REITs. For example, he chose Government Properties Income Trust, which pays a higher yield (8% recently) than some commercial REITs because it has reliable government tenants—“The IRS isn’t moving,” he says—who make do with no-frills facilities.

Risk? You can’t escape it entirely. Stocks are vulnerable to market risk; real estate can be hurt if the economy sinks into recession; and falling oil prices aren’t good for energy-related investments. But even if share prices bounce around, the income from these investments is secure. And that’s what people like Mary and Andy are looking for—so much so that we have introduced a new publication: Kiplinger’s Investing for Income, a monthly newsletter that focuses intensely and exhaustively on strategies to boost your yield (see a sample issue).

A big thanks. Our app, Kiplinger’s Top 100 Money-Saving Tips, is a smashing success, thanks to thousands of downloads by readers and others who have found us on their iPads. We’ve received a number of questions: How can I get the app if I don’t have an iPad? There’s a PDF version of the Money-Saving Tips collection. Why isn’t it available on the iPhone or Android phones? Unfortunately, each platform requires different production technology. We chose the iPad because its size makes it most suitable for a magazine format. Why did you charge for the app instead of offering it free? Because this exclusive collection of valuable advice is a special issue, much like those we publish and sell on newsstands. And, frankly, I consider the $1.99 price a giveaway bargain that belongs at the top of our annual honor roll of best deals.

This article first appeared in Kiplinger's Personal Finance magazine. For more help with your personal finances and investments, please subscribe to the magazine. It might be the best investment you ever make.

Janet Bodnar is editor-at-large of Kiplinger's Personal Finance, a position she assumed after retiring as editor of the magazine after eight years at the helm. She is a nationally recognized expert on the subjects of women and money, children's and family finances, and financial literacy. She is the author of two books, Money Smart Women and Raising Money Smart Kids. As editor-at-large, she writes two popular columns for Kiplinger, "Money Smart Women" and "Living in Retirement." Bodnar is a graduate of St. Bonaventure University and is a member of its Board of Trustees. She received her master's degree from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.