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Dear Mr. Berko: Can you give me the names of seven stocks to consider that yield better than 8 percent and have raised their dividends at least by 50 percent in the past decade? I can afford modest risk to achieve my objectives and would like to invest about $16,000 in five or six different issues.

H.E.

Dear H.E.: I don鈥檛 know your risk profile, so I can鈥檛 determine if the following issues meet your requirements. And because an 8 percent yield plus dividend growth is hard to find, I鈥檇 like you to consider some publicly traded Master Limited Partnerships. Most MLPs are in the pipeline, storage and transportation business, which provides a modicum of protection from the price volatility of the energy business. Pipeline MLPs get paid for the volume of product that passes through the pipeline, so the cost of gas or oil doesn鈥檛 affect them. The yields are extremely attractive, and because the MLP passes its depreciation to the investor, a large portion of the dividends is not taxable. However, the portion that isn鈥檛 taxable reduces the cost basis of your shares. MLPs are best held in taxable accounts because you lose the tax advantage if they are owned in a retirement account. Most of the following MLPs have a good record of dividend growth and are trading at lower prices than they did as recently as a year ago.

ONEOK Partners LP (OKS-$52.91) has $6.2 billion in revenues, and traded in the mid-$60s during the last 12 months. Its $4.32 dividend, which has increased in each of the past 10 years, yields 8.5 percent. This natural gas pipeline is the largest in the nation, and it鈥檚 operated superbly by a seasoned management team. The stock trades at 12 points below its 52-week high price.

Penn Virginia Holdings LP (PVG-$13.00), a $900 million revenue LP, has been doing business since 1882. It became public in December 2006 at $20. The $1.52 dividend, which has increased 50 percent since the December IPO, yields 12.3 percent. Penn Virginia Holdings operates a midstream natural gas gathering and processing business, and manages a number of coal and natural resource properties. Its 52-week high share price was $33.

Calumet Specialty Products Partners LP (CLMT-$15.85) is a $1.8 billion producer of high-quality special hydrocarbon products. It processes oil into customized lubricants, white oils, solvents, waxes, lighter fuels, candles, petroleum jelly, creams, lotions, tonics, transmission fluids, aerosols, jet, diesel and automobile fuels. Calumet Specialty Products Partners has been in business since 1916, and its $1.80 dividend yields 12.6 percent and has increased 50 percent since becoming public in late 2006. The shares trade approximately at their 52-week high.

Duncan Energy Partners LP (DEP-$19.57) is a $1.3 billion revenue company that gathers, transports, markets and stores natural gas liquids and petrochemicals via 9,500 miles of pipeline. Since becoming public at $22 in January 2007, its $1.74 dividend, which yields 9.6 percent, has nearly doubled. Duncan Energy Partners鈥� 52-week high is $20.

DCP Midstream Partners LP (DPM-$24.54) is a $1.1 billion revenue LP that gathers, compresses, treats and sells natural gas, natural gas liquids and propane. The $2.40 dividend yielding 10 percent has nearly doubled since the company became public at $22 in December 2005. DCP now trades about seven points below its 52-week high.

TransMontaigne Partners LP (TLP-$26.73) pays a $2.36 dividend, which yields an 8.6 percent dividend that has grown 50 percent since the company went public at $25 in May 2005. TransMontaigne operates as a transportation company; it provides storage for customers who sell various refined petroleum products. It trades about 2 points under its 52-week high.

Teekay LNG Partners LP (TGP-$24.10) pays a $2.28 dividend yielding 10.2 percent that has more than doubled since the company went public at $25 in May 2005. Teekay LNG Partners provides transportation for natural gas and petroleum gasses (propane, butane, ethane, ethylene, ammonia and propylene) with a fleet of 18 tankers. The stock trades about a point below its 52-week high of $25.25.

Address your financial questions to Malcolm Berko, c/o The Daily Journal of Commerce, P.O. Box 8303, Largo, FL 33775, or e-mail him at [email protected].
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