investmentTo the surprise of some inflation-focused analysts, interest rates remain low and look like they will for the foreseeable future. Those low rates have been hard on investors who counted on interest income from their CDs, bank and money-market accounts. For these investors, it's becoming clear they will have to move into riskier assets if they have any hope of improving their returns. But how can investors take on greater risk while maintaining the security of their investment capital?

One possibility is to invest in stocks of utilities, many of which are rock solid financially and pay dividend yields well above the 0.04% interest rate on a typical money market fund. Another option is to buy oil pipeline master limited partnerships that yield 6% to 7%. On $100,000, such an investment can generate monthly income of $583 – much better than the $33 they're getting now.

The utilities are far less complex from a tax standpoint but they have lower dividend yields. Let's consider one such utility, New York's Consolidated Edison (ED). It pays a dividend yield of 4.92% and that figure has grown at a 5.1% annual rate over the last five years. Its operating performance is also pretty solid -- generating $13.2 billion in sales and $947 million in net income over the last year -- growing respectively at 6% and 9.6% five-year compound annual growth rates. The stock has risen 21.3% in the last year, and at a P/E of 14.3, it's a bit expensive compared to its 4.4% earnings growth forecast for 2011.

If a nearly 5% yield is not enough, investors could go further out on the risk/return spectrum and look at oil and gas pipeline master limited partnerships (MLPs) that pay out their substantial profits to their limited partners every year. The bad news about these is that you will probably need to pay a tax adviser to help you with the complex tax reporting requirements, according to MSN. The good news is that these MLPs generate yields in the 10% to 12% range and you don't have to pay taxes until you sell them.

One candidate to consider is Duncan Energy Partners (DEP), which stores and distributes natural gas. It has a dividend yield of 6.31% and its shares have risen 54.2% in the last 12 months. Duncan generated $1.1 billion in revenues during the last year and that figure has been growing at a 5.5% annual rate. Moreover, insiders have been buying during the first half of 2010.

Two years ago, these MLPs yielded 10% to 12%. But now that those yields are down close to what utilities like ConEd are paying, So the latter may be preferable at this point since they do not come with all the tax reporting headaches.

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kfed@email.com

This article does not discuss an enormous option for interest rate seekers. Interest rates are set by a countries central bank, and not all countries central banks are paying low rates, some are actually quite high right now. I'd recommend getting a Swiss bank account. I did. You're not going to find a country with a safer, more stable banking industry. Switzerland has never had a banking crises, whereas the USA is experiencing its 3rd one in the last 110 or so years. Many Swiss bank accounts can hold several different currencies, and offer CDs in different currencies. All you have to do is pick a currency from a strong, stable country that is paying a reasonable interest rate. Its that easy. I have the full list of Swiss Banks available here: http://www.aggregate-finance.com/swiss-bank-account.htm?hop=yakimaguy

September 19 2010 at 5:46 AM Report abuse rate up rate down Reply
otterdad48

Calling the playing of the markets "investing" is disingenuous at best. Investing is putting money into business that actually produce something and hire people. The stock markets have long ceased to function as a way to bring capital to business and now function as a shell game that transfers wealth to the top of capitalism's food chain.

September 11 2010 at 10:35 AM Report abuse rate up rate down Reply
crimeslawyer

Yeah right. When I move into these wonderful investments, they will be included in the next crash.

September 10 2010 at 1:09 AM Report abuse rate up rate down Reply
Jane Kay

Everybody needs more income--but if you are limited as to the amount of money you have to invest--how can you buy stocks that are sky hi for one much less a 100?How about the "little" people that can come up with $10,000----and maybe get a 3% return---anything helps---

September 09 2010 at 9:44 PM Report abuse rate up rate down Reply
1 reply to Jane Kay's comment
ARTIE CAB

Invest that 10 grand in CIM at their current price ($4.05) and you can buy 2469 shares that will pay you a .17 cent quarterly dividend in October 2010 which translates into $419 bucks. Multiply that times 4 times a year. That comes to 1679 bucks annually, which is a 16.76% return for a year which isn't chump change. Buy additional stock with the dividends to make more each quarter. You will probably make some money on principle as well because of the small annual trading range of less than a dollar. The stock could go to the moon in this arena where everyone is buying dividend stocks. (Or it could go into the toilet). Good luck.

September 11 2010 at 1:58 PM Report abuse +1 rate up rate down Reply
stevelauper

Invest in LEAD, China is putting it in everything.

September 09 2010 at 6:25 PM Report abuse +5 rate up rate down Reply
2 replies to stevelauper's comment
Gumby

You cracked me up!! HA HA!!

September 10 2010 at 3:13 AM Report abuse +1 rate up rate down Reply
Gumby

Better invest in aluminium!

September 11 2010 at 3:18 PM Report abuse rate up rate down Reply
Bill

What about investing in ag real estate? I understand the big investors (millions and billions) in ag properties have stated they think these properties will double in the next five years. Just saying.

September 09 2010 at 6:01 PM Report abuse +1 rate up rate down Reply
Big John

Gee thanks Alan and Ben, Wall Street and the banks love you dearly.

September 09 2010 at 5:18 PM Report abuse +3 rate up rate down Reply
malcolm

I'd invest in Ecoli seems to be catching on with alot of products

September 09 2010 at 4:57 PM Report abuse +5 rate up rate down Reply
sbhindenver

Where to invest. I've always known that one of the best returns on cash is the invested equity(down payment) in owning a home. This assumes a stable and expanding economy in which a property is located (I'm in Denver). By the time the tax savings resulting from the deductability of interest and proprtry taxes and the appreciation that occurs is analyzed, one can usually make a case for a return of about 17 ot 20%. It need to be clearly understood that I don't buy into the sky is falling mentality of the mobius strip of media & "analysts" and "experts" that have crawled out of the woodwork to make housing their favorite whipping boy. @http://holbenhomes.com

September 09 2010 at 4:42 PM Report abuse rate up rate down Reply
Gumby

The rich and savvy has many ways of unloading the overpriced debt instruments even if you think you are too smart to buy them. The rich and savvy has financial advisers to help them unload to others who in turn get their money back through charging to Joe Public or other fees and even taxes.. The rich wants tax cuts but want tax increases put on Joe Public so Joe pay their own way..

September 09 2010 at 4:01 PM Report abuse +3 rate up rate down Reply