Looking Ahead A Few Years Can Deter The Temptation To Do Something Stupid

If you do enough financial reading, you will eventually encounter finance writers that encourage you to buy companies yielding 7%, 8%, 9% as a suitable investment for retirees seeking income. With the exception of some energy MLPs (which can make sustainable high-yield distributions because they return all of their profits to shareholders and part of the payout is a return of your own investment capital), I find it unfortunate that certain companies are being touted as long-term investments when they don’t even have a five-year track record of making consistent payouts. Something yielding 10% now, but didn’t exist as a business in 2005 and cut its dividend in 2008 and 2010 doesn’t strike me as fertile soil for a long-term investment.

Yet, companies that have been maintaining high yields for a few years in a row often become competitive with many traditional blue-chip stocks, with investors saying things like “even … Read the rest of this article!