Financial planners like to put you in one of two camps:
The "growth camp," which they say is right for younger investors, and the "income camp," which they say is proper for retirees and those close to retirement.
Don't believe it.
There's only one reliable way to make 10% or more a year… especially now, in a rising interest rate environment. (See Part I and Part II.)
Growth and income are inseparable. The three companies you'll see today are perfect examples of this.
And "total return" has never been more important to seek…
Growth Is the New Income
I like to buy income-generating assets that have the potential to provide me with 5% to 10% per year in capital appreciation and that also will pay me between 5% and 10% in cash.
That's because seeking yield alone is dangerous. It can suck you into bad investments. After all, a high yield is high for a reason.
Take mortgage REITs, for example.
These are favorites among the high-yield seeking crowd, and in many cases they pay yields north of 10%. The downside here is that they also get sold off hard in a rising interest rate environment.
In fact, over the past six months the share price of the benchmark Market Vectors Mortgage REIT ETF (NYSE Arca: MORT) has plummeted nearly 20%. That's the kind of math that just does not work if your goal is to generate total return north of 10%.
Another high-yield favorite with little growth potential at this time is preferred stocks. As interest rates rise, the value of fixed-dividend payments is diminished.
Traders know this, and they've run for the preferred exits.
Just look at the iShares S&P U.S. Preferred Stock Index (NYSE Arca: PFF), which serves as a proxy for the entire preferred stock sector. This fund offers an attractive yield of 5.8%, but over the past six months the share price has declined 6.6% – a losing proposition.
To put the math on your side, and to reach that Holy Grail of double-digit annual returns, you need to seek out investments with solid yield and outstanding growth potential.
It takes a little more time. But the effort will pay off handsomely, because it will allow you to find companies like these…
3 Ways to Grow Your Money 10% or More Every Year
One sector currently offering both high yield and strong growth potential is energy master-limited partnerships, or MLPs. I like this sector because in addition to yields of 5% or more, they also are in the secular growth space of energy production and storage.
You need to have the stock symbol linked, like other sites, to some stock quote site so people can check out the prices.
Ethan:
The missing links for the stock symbols was a production error. We have restored them in all three segments of this series. Thank you for pointing it out, and thanks for reading Money Morning!