Year-to-date, General Electric is the worst-performing stock in the Dow, down 22.3%. Meanwhile, TEPPCO is up 69%, including dividends.

(If any of you took me up on my income investment recommendation, e-mail us and let us know how you did at comments@investmentu.com.)

Of course, part of the move higher for TEPPCO can be attributed to news that Enterprise Products Partners (NYSE: EPD) is buying the company, as I predicted.

For those of you that purchased the stock, I recommend you take profits now. And whatever you do, don’t reinvest them in GE.

GE: Reasons Why It’s Not a Safe Income Investment

My reasons for disliking GE as a safe income investment remain the same.

The company defies the golden rule of income investing – go with simple businesses, because simple businesses make money and can pay dividends, consistently.

Remember, GE’s business is all over the place with sales in water, security, railroads, oil and gas, media and entertainment, lighting, health care, consumer lending, commercial lending, energy, electrical distribution, consumer electronics, aviation and finally (drum roll) appliances.

And it’s only getting more complicated. This week, the company announced it’s getting involved with embryonic stem cell research.

Another problem? GE will always be fighting the law of large numbers. At a market cap of $125 billion, it takes an awful lot of growth to move the earnings needle and in turn, share prices.

Right now, that’s not happening.

Income Investing: The Smart Way to Pick Dividend Stocks

Again, it’s not fair of me to bash GE without offering up an alternative. So here it is: Windstream Corp. (NYSE: WIN).

The company is the country’s largest rural wireline telecommunications company. It was formed in mid-2006 through the combination of ALLTEL’s wireline business with VALOR Communications Group.

It operates in 16 states… in the sticks! Off-the-beaten-path markets, where big carriers like AT&T and Verizon don’t focus because the upfront costs are too high. Just to give you an idea, in most suburban and urban markets the number of access lines per square mile are over 110. In most of Windstream’s markets it’s below 20.

Obviously, this lack of competition confers notable advantages on Windstream. Namely, high and steady profit margins. Even in this declining market, Windstream’s been able to maintain its operating margin of 35%.

Even better, at current prices, the stock yields 12%. (In comparison, GE currently yields 3.4%).

Here are the four main reasons I believe this dividend is safe:

• Wide Economic Moat. Many carriers are losing traditional phone customers to cable phone services. However, Windstream is partially insulated from this trend. About 30% of its customers don’t even have the option to get cable modem services. The cable companies just don’t serve those markets. At the same time, the severities of this recession are forcing many larger carriers to cutback or suspend expansion efforts into Windstream’s territories. The delay only allows the company to solidify its competitive position and minimize the impact of new entrants over the long term.

• It’s Growing for Free. The big old honking stimulus bill included $7.2 billion in funds for Internet expansion. Windstream qualifies for the grants and can use the “free” money to expand its footprint in rural markets.

• Solid Cash Flow. In the last year, cash flow improved 14% to $763 million thanks to lower capital expenditures and cost cutting efforts. In 2009 we can expect the same, as management doesn’t anticipate the need to increase capital expenditures.

• Credit is No Concern. Windstream’s got a sizable $5.4 billion debt balance, but it’s reasonable relative to cash flows (interest expense should consume less than 28% of cash flow), lower than the industry average leverage and there’s no immediate need for refinancing. The earliest debt maturity is in 2011 for $457 million. If necessary, the company could pay off the balance from current cash flows and the money in the bank. After that, the next significant debt maturity doesn’t come until 2013.

Like TEPPCO, Windstream comes with a kicker – it’s also a takeover target.

In the last five years we’ve seen larger carriers, eager to juice growth, acquire rural carriers with high margins for a hefty premium. Windstream possesses the same qualities of past takeover targets, so a deal is certainly possible in the next six to nine months. A cheap valuation, at just 9.5 times forward earnings, increases the odds.

Bottom line, Windstream provides reliable income and the potential for significant capital appreciation like we witnessed with TEPPCO. Sadly, we can’t say the same about GE. So dump it if you own it! And Buy Windstream instead.

Good investing,

Lou Basenese

Source: Need an Income Investment? Keep Dumping GE and Buy this Stock Instead

Two months later I recommended it to my readers. In the following six months its shares rose 15 percent. On February 25, 2009 utility company, FPL Group (NYSE:FPL), made a similar announcement. I began looking into the company right away. This time it only took me two weeks to recommend the company to my readers. In the following four months its shares rose 33 percent.

On March 11 Coke (NYSE:KO) made the same announcement. On April 1st, 2009 I recommended it. In just three months it’s gone up nine percent.

These three companies are members of a class of companies I call the “Group of 88.” They all love to please their shareholders.

So, what is this Group of 88?

Many of the companies belonging to the Group of 88 you know: Not only Coke, but also companies like Johnson and Johnson (NYSE:JNJ), IBM, Verizon (NYSE:VZ), McDonalds (NYSE:MCD) and Starbucks (NASDAQ:SBUX).

Many of them you don’t know. You probably haven’t heard of companies like VSE Corporation (NASDAQ:VSEC), W.P. Carey & Company (NYSE:WPC) and National Fuel Gas Company (NYSE:NFG).

These companies come in all sizes and from all kinds of sectors. And, since the beginning of the year, they all have one thing in common. All of them have raised their dividend.

Increasing dividends has always been a surefire way to please shareholders. So why have dividend hikers increased in popularity?

•    They’re now in the minority. For the first time in decades more companies are cutting rather than raising dividends.
•    They’re the ultimate “show-me-the-cash” companies. Dividends can’t be faked or staged. They must be paid for by real cash earnings.
•    They’ve become the alternative safe-haven group of companies to triple-A rated companies. The rating agencies – S&P, Moody’s, and Fitch – had given triple-A status to junk assets that crashed the global economy. Their grades aren’t taken nearly as seriously anymore.

Many of these dividend-paying companies give you interest payments of 4, 5, 6 percent and more. Compare that with 2-year U.S. government bonds giving 2 percent interest … or 10-year bonds giving 3.66 percent interest … or Canadian 10-years giving 3.43 percent and Germany’s giving 3.5 percent.

This is the perfect time to invest in recent dividend hikers. Several have been raising dividends not just over, say, the past 10-20 quarters but over the past 10-20 years!  Think about it. Many of them have raised dividends during oil embargoes, dotcom busts, and stagflation. They’ve proven themselves many times over.

And by recently raising their dividends, they’re showing investors once again that they’re the companies you can trust … they’re the ones generating real cash earnings … and that they’re the ones which will make it through these treacherous times and lead the market back up on the other side of the recession.

Invest well,
Andy

Source: Investors Are Flocking to a New Group of Companies

Silver traced out almost exactly the same path as gold, closing at $13.81/oz., up 11 cents. Overnight, silver is sharply higher. (Click here for charts)

Monday’s debacle was likely fresh in traders’ minds as the precious metals limped home with modest gains in the case of gold and silver, unchanged for platinum.

That had to be disappointing to the metals’ fanciers as the dollar, which has been a primary inverse driver for the sector, plummeted against the euro. In addition, rising oil prices should have been supportive. But buyers just failed to appear.

Analysts said investors were simply being cautious ahead of today’s monetary policy statement from the Fed.

“I would be surprised if they did anything dramatic. The Fed is trying to nurse the recovery along without killing off the housing market again. In terms of gold, it keeps the uncertainty up there a bit. That keeps a floor (under prices),” said Michael Wallace, global market strategist at Action Economics.

However, Wallace added, “in the bigger picture, we may see a saucer-shaped recovery, which helps keep a lid on prices.”

Investment in the SPDR Gold Trust (NYSE:GLD), the biggest exchange-traded fund backed by bullion, slipped to 36.37 million ounces on Monday, from 36.4 million. It was the first decline in 11 sessions.

And while platinum continues to languish on a perceived fundamental weakness, John Reade, of UBS in London, wrote that, “We still like platinum’s fundamental demand drivers more than those of gold,” making it even more attractive as an investment.

Source: Precious Metals Go Soft

Shares of Kaminak Gold added C$0.055 to close at C$0.18 after the junior announced that it picked up an option to earn 100 per cent in three projects located in the White Gold area of the Yukon.

Moly miner Roca Mines added C$0.065 to close at C$0.40 on no new developments.

Charles Fipke-led Metalex Ventures reported that the third vertical hole drilled on a kimberlite discovery in Angola hit kimberlite at 12.2 metres depth and the drill is still in primary kimberlite at 141.8 metres depth. Metalex is hoping that the eroded parts of this pipe are the source of the abundant high-quality alluvial diamonds being mined downstream. Metalex ended the day up C$0.10 at C$0.69.

On the copper front, shares of Anvil Mining added C$0.26 to close at C$1.39 after the company closed a C$34.5 million financing priced at C$1.15 per share. The funds will be used on its Kinsevere copper mine project in the Democratic Republic of Congo.

Phoscan Chemicals surged C$0.10 to C$0.43 on no new developments. The cash rich company holds the Martison phosphate property in Ontario.

Kinross Gold (NYSE:KGC) has agreed to take down 10 million of the 14 million shares of Fortress Minerals being offered at C$0.25 per share. The proceeds will be used on the Svetloye gold Project in Far Eastern Russia. Fortress ended the day up C$0.06 at C$0.35.

A rising tide lifts all boats seems to be the saying of the day. The euphoria has junior exploration companies once again talking about spinning off assets to unlock value. This suggests that the go-go mentality is coming back into the sector….perhaps way too soon. Unemployment numbers for Canada and the United States are due to be released on Friday so some caution is warranted. We shall see what Tuesday trading has in store.

Source: Resource Stock Roundup:Tuesday, May 05th, 2009

Shares of Evolving Gold added C$0.02 to close at C$0.38 after the junior reported that metallic screen re-assays have increased gold values at the Rattlesnake Hills project in Wyoming. Highlights included 2.74 grams gold per tonne over 131.1 metres.

International Tower Hill Mines is looking to cash in on the gold craze by offering up two million shares at C$2.50 a piece. The company closed unchanged at C$2.95.

Northern Freegold tabled a 1.24 metre section running 206.5 grams gold per tonne from its Freegold project in the Yukon. Investors rewarded the junior by bidding up its share price by C$0.08 to C$0.66.

Just when the market looks set to retest its lows a late day rally puts the bulls in the drivers’ seat. We will see what Friday trading has in store.

Source: Resource Stock Roundup: Friday, February 13th, 2009

The numbers offer more evidence of the dismal economic conditions facing President Barack Obama’s administration.

The news confirms a relentless downward spiral for home builders, who have all but shut down building projects as home values plunge and potential buyers stay on the sidelines.

“What you’re seeing is capitulation by home builders,” John Lonski, chief economist at Moody’s Corp. (MCO) told The New York Times. “The news you got today reinforces the view that stabilization of housing starts is well off into the future.”

Housing starts fell 15.5% to a seasonally adjusted annual rate of 550,000 units from an upwardly revised rate of 651,000 units in November, the lowest on record, the Commerce Department reported yesterday (Thursday).

The pace of new-home construction in December was 45% below its levels from a year ago. For all of 2008, the government estimated that 904,300 housing units were started, down 33% from 2007.

A Labor Department report spelled more bad news for the housing market, as the number of Americans filing first-time unemployment claims matched a 26-year high in the week ended Jan. 17. Initial jobless claims increased by 62,000 to 589,000, greater than economists had expected.

“The worst is not over,” Lonski said. “Rising unemployment and tightening credit conditions are worsening the prospects for housing, which by itself suggests that we could be surprised at how poorly the economy performs in the early part of 2009.”

As Money Morningsaid in its 2009 Housing Forecast, skyrocketing unemployment acts like a 1000-pound ball and chain around the neck of the real estate market.

Builders, whose shares have lost 76% of their value over the last three years, are slashing prices to compete with a record number of foreclosed homes coming onto the market, Bloomberg News reported.

“Homebuilders have no choice,” Ryan Sweet, an economist at Moody’s Economy.com, told Bloomberg. “The market is bloated with excess supply and demand is weak. The pace of housing starts will remain depressed until 2011.”

Big homebuilding firms like D.R. Horton Inc. (DHI), Lennar Corp. (LEN) and Toll Brothers Inc. (TOL) are limping along, bleeding cash and fighting for survival. But the downturn isn’t just hurting only big builders anymore.

The malaise is spreading now to the smaller mom and pop builders. Approximately 20% of the nation’s homebuilders have closed their doors.

Hammered by collapsing prices and banks scrounging for cash, even the industry’s brightest stars are finding themselves with their backs against the wall.  Banks are now yanking credit lines from small and mid-size homebuilders even before they miss a single payment, The New York Times reported.

Lenders, for their part, are demanding more collateral to mitigate risk.

That’s what happened to Brown Family Communities, a well-known builder in the Phoenix area. Despite never missing a payment, JP Morgan Chase & Co. (JPM) demanded millions in cash for land on the outskirts of town that had fallen in value. Brown balked and lost the property, ultimately closing his doors.

“The real estate market is gone,” Brown said.

Banks like JPMorgan loaned builders hundreds of billions of dollars to buy up vacant land. Now that buyers in some areas can pick up previously constructed homes for less than it costs to build a new one, demand for new homes has plunged. That means builders’ are no longer able to turn a profit.

Obama’s National Economic Council Director Lawrence Summers said last week the president intends to use between $50 billion and $100 billion of the remaining half of the $700 billion bank bailout fund enacted last year to address foreclosures and bring stability to the housing market.

Source: Homebuilders Give Up as New Housing Starts Hit 50 Year Low

Industry sources say the rise in retail demand for gold may turn Japan into a net importer again, but that may not happen immediately as many players are still looking to unload their gold holdings when prices recover.

Japan was a net importer of gold in October for the first time this year as investors bought on a plunge in prices, but exports exceeded imports again in November, finance ministry data showed on Friday.

In the eleven months to November, Japan’s exports of unwrought solid gold, gold bars and sheet totalled 393.9 tonnes, up from 174.9 tonnes in 2007.

In November alone, Japan exported 47 tonnes of gold, rising more than five-fold from October, while imports more than halved to 4.1 tonnes from the previous month.

A Tokyo-based trader said the rise in exports last month may have been related to spot gold prices rebounding above $800 an ounce after falling to near $680 in late October.

“There were still many people who hadn’t sold,” the trader said, referring to a wave of selling after spot gold prices hit a record high of $1,030.80 an ounce in March.

But he noted that in Japan, premiums on spot gold rose by as much as about $2 when gold prices dipped below $700, reflecting strong demand from Japanese individual investors.

That compared with discounts deepening by as much as around $3 when the gold market was rallying.

The global financial turmoil has prompted many Japanese retail investors to reassess gold as a long-term investment rather than just a safe haven at times of crises, industry sources say, adding that a wider array of investors are now attracted to metal.

Other overseas assets have lost their appeal as central banks around the world slash interest rates close to zero, wiping out huge yield differences and on the yen’s appreciation to 13-year highs against the dollar.

“Although the principal is not guaranteed and it’s does not bear interest, gold does not fail,” said Osamu Ikeda, general manager at Tanaka Kikinzoku Kogyo, Japan’s biggest bullion retailer.

Tanaka Kikinzoku saw a record number of new customers signed up for its online gold savings plan in November, which allowed customers to start from a purchase of a minimum of 1,000 yen worth of gold each month.

Tanaka does not report actual volumes or value, but it said its sales of gold exceeded its purchases for the fourth month in a row in November.

“Given the lack of a key, strong currency, the importance of gold as an alternative to the dollar has been heightening,” said Takeo Okuhara, market economist at Daiwa SB Asset Management.

“Gold is an asset with value more than zero and is also regarded as a type of savings in times of economic deterioration,” he said.

Some of the gold individual investors sell to bullion houses is recycled for industrial and jewellery use in Japan, but the remaining bulk is sold via Singapore and other trading centres to the rest of the world.

Chikako Mogi, TOKYO, Dec 26 (Reuters)

This from Fleet Street Daily:

Investors tend to fixate on the stock market as a way to make money. When stock markets are in chaos, they see no way out. I’m surprised that so few investors pay attention to the currency markets. After all, in terms of volume and value, the Forex dwarfs the equity markets. But I get the feeling that’s going to change.

Currency stories are all over the financial pages at the moment — and investors are starting to realise that there’s a way to play it. For the more adventurous investor, spread betting offers easy access to a once out-of-reach market. But then not everyone is into that kind of leveraged speculation.

There are safer ways to play this new-found interest in the currency market. I’ll introduce you to a colleague who’s found a conservative way to do it in a moment. But let’s just talk a bit about context first.

The Bank of England has little choice but to cut interest rates and cut them aggressively. We could even see an emergency cut ahead of the next scheduled meeting on 5th/6th November.

That’s bad news for the pound. Money chases yield. So if the UK base rate falls from the current 4.5% to, say, 2%, then sterling becomes a lot less attractive to yield chasers.

The pound was worth two dollars in August. It’s now worth not much more than 1.5. I’ve even seen calls for year-end pound-dollar parity — one pound for one dollar. And why not? I mean already in just the last three months, the pound has fallen almost 50 cents. Why shouldn’t it fall a further 50 cents in the next two months?

When Forex trends take hold, they can run and run. And they can overshoot, just like all markets tend to overshoot. With the picture as bleak as it is for the UK economy right now, it’s got every chance of doing that.

We’ve got rapidly rising unemployment. We have a burgeoning trade deficit. The housing market will continue falling. And the whole financial crisis is drawing investors away from the UK.

“Sterling has long been particularly vulnerable because the imbalances in the UK economy — notably the dire state of households finances and the large external deficit — are just as severe as those in the US,” said Julian Jessop, chief international economist at Capital Economics.

And we should remember that UK rate cuts are likely to be much more aggressive than in the US. That’s because we have more room to cut. Our base rate is at 4.5% compared to the current 1.5% in the US.

Of course, this is largely priced into the cable rate already. Even so, sentiment is against the pound. We’ve seen what sentiment has done to stock markets recently. In these extraordinary times, we could quite easily see extraordinary moves.

Pound/dollar parity is certainly a bold call. But then so, it seemed, was calling the FTSE at 3,500 just a few months ago — and it’s not far away from that level right now. And colleague, Bill Bonner’s “Dow 5,000″ call suddenly looks very “on the money”.

The last time the pound came close to parity with the dollar was in February 1985, Back then, cable touched $1.02 at one point during trading. It might not get there this time, but it could certainly have another go.

Source: When Stock Markets Are In Chaos…