How To Earn Income in This Low Yield Environment

Suck it up, America.

You’ll make close to nothing on your savings — and like it.

Holding rates near zero “may limit the financial returns to saving for a time,” the Fed said in recent testimony.

But the goal is “to strengthen the economic expansion and, over time, return the economy to sustainable rates of output growth, unemployment, and inflation.”

You’ll be fine, Average American… just fine.

The Fed further explains:

Many households are benefiting from the low level of interest rates, and some critics of the Federal Reserve’s accommodative monetary policy seem to minimize this point…

Purchases of motor vehicles and other household durables can be financed more cheaply, and in many cases, households have been able to refinance their mortgages into lower-rate loans, freeing up income for other uses.

That should make the average American feel better, shouldn’t it?

Between that and news the Fed will keep rates near zero through 2014, you should do just fine with your money sitting in a savings account, right?

Wrong.

Fortunately, there’s a better way to ramp up your money in a low interest rate environment…

A Better Way

Buy high-growth, high-dividend-paying stocks instead.

The United States Government has forced us into this…

Bernanke has already quantified that low interest rates are here to stay for another two years, forcing income investors out of Treasuries and into dividend stocks for price safety.

Buy the dividend stocks for some degree of stability — even in times of instability.

Warren Buffett endorses dividend-paying stocks because:

Investors win two ways when a company increases its dividend. First, the yield on your initial investment goes up with the dividend; second, and even better, the dividend increase often propels the share price higher.

That’s an unbeatable combination in today’s tough markets.

And it’s the reason that investors are so eager right now to gobble up companies with solid dividend yields.

You can always buy and hold stocks like:

* Coca-Cola (KO) – pays a 2.9% dividend
* General Electric (GE) – pays a 3.6% dividend
* Intel (INTC) – pays a 3.10% dividend
* Johnson & Johnson (JNJ) – pays a 3.5% dividend
* PepsiCo (PEP) – pays out a 3.3% dividend
* Wal-Mart (WMT) – carries a 2.5% dividend
* Exxon Mobil (XOM) – pays out a 2.2% dividend

Another sector I’d pay attention to is railroads — especially now, as they serve to transport much of the abundant shale oil and gas in North America that you may have heard about.

Buffett himself made a billion dollars in dividends from BNSF Railway in 2011.

Take a look at Canadian Pacific Railway (NYSE:CP), for example…

I’d buy on the latest dip because of its exposure to transporting domestic oil out of the Bakken region.

It also pays a respectable dividend of 1.6%.

On Tuesday, the company said it should start shipping crude oil from its soon-to-be-launched terminal out of North Dakota’s Bakken.

With oil likely to spike on an Israeli offensive inside Iran, we could soon see prices hit $150/barrel, sending domestic demand — and therefore, rail traffic — through the roof.

The bottom line is not to waste your time waiting for interest rates to move higher…

Stay Ahead of the Herd,

– Ian CooperSource: Wealth Daily

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