Working on rebuilding a 50-60% income allocation....

I've been using preferred stocks and a couple of high dividend paying SP500 stocks for my fixed income portfolio, getting $50-60k/yr.

Preferreds are per Doug K Le Du's criteria as laid out in his book Preferred Stock Investing and his newsletter. preferredstockinvesting.com: Preferred Stock Investing . You don't need more than a year's subscription; between that and his book you'll have all he has to teach. I've modified his criteria to an extent: at least 6% coupon (I don't care about yield), a time to maturity/eligibility for call of at least 3 years into the future, and a market price no more above par than what can be covered by 2 dividend payments (so the capital loss on call is both small and already paid for by those dividends) or not "too far" below par (I use, loosely, 10-ish percent below), since a price much below par indicates the issuer is in trouble. I don't chase coupon any more than I chase yield; a "too high" coupon indicates a company in trouble, also (I use 10% as a cutoff here, too). I keep around 5-8 preferreds.

My SP500 high dividend stocks are BEN, D, KHC, GIS, and BBY. D has been undergoing a slow-motion reorg over the last few years, so it may not have much longer in my portfolio. The last three are recent additions and may not work out.

Eric Hines