Table of Contents

1.  Market Update
2.  Magellan Midstream Holdings (MGG)
3.  Evergreen International Balanced Income (EBI)
4.  Additional Investing Ideas
5.  Investor Trivia -- The World's Strongest Banks
6.  Featured Topic -- Taking a Cue from the Richest Woman in the World
7.  Free Investing Resources

Today's Top Stock Picks

This Company Has Pumped Its Dividend Up By +40.4%
Magellan Midstream (MGG) does more than pump petroleum products through its pipelines. It has grown its dividend by over +40% in the last three years and delivers a steady double-digit yield. Read More. . .

Balanced Income With a 17.3% Yield
Trading at a historic discount of -22.1%, this closed-end fund holds a diversified portfolio of stocks and bonds. And investors locking in now could receive an additional appreciation bonus once the discount starts to narrow.
Read More. . .

Market Update

It's not often that a weekly decline of -2% in the major averages could be viewed as positive, but this just might be one of those times.

After all, the week began with a demoralizing -8% plunge on Monday that short-circuited a nice five-day winning streak. The Dow surrendered almost 700 points and suffered its fourth largest point drop on record. The fact that three of those four declines have occurred over the past couple months should tell you what kind of year we're having. Unfortunately, a steady flow of ominous economic headlines appeared to set the tone for even further losses in the days to come.

First, the National Bureau of Economic Research confirmed what many have long suspected, officially declaring the U.S. to be in the throes of a recession. In fact, the agency concluded that our economy has been shrinking since last December, which would already make this recession one of the longest in the post-war era.

As if to validate those findings, a key barometer of health in the service sector slipped well below already pessimistic predictions -- suggesting that hoteliers and other service-based firms continue to struggle. Meanwhile, there have been plenty of other discouraging signs: rising mortgage delinquencies, plunging factory orders, anemic auto sales, etc. etc.

But the most alarming data point was unveiled on Friday, when we learned that a staggering 533,000 workers lost their jobs last month.

However, following the carnage of the past few months, it's pretty clear that a rapidly deteriorating economic picture has already been priced into the market. So rather than cower under the dismal numbers, investors actually shook them off and went on a buying spree instead -- a classic sign of a market that is in the process of bottoming.

If bearish financial headlines have lost their shock value and don't automatically trigger knee-jerk sell-offs, then we're one step closer to a recovery.

In any case, balanced funds that hold both stocks and bonds can be great all-weather investments. And below, High-Yield International editor Nick Lanyi gives a sunny forecast for one of his favorites, Evergreen International Balanced Income Fund (NYSE: EBI, $10.10). The hand-picked portfolio features some of the most attractive income-producing securities from around the world -- and it's trading for just $0.80 on the dollar.

Also in today's digest, High-Yield Investing editor Carla Pasternak has turned up another promising idea for income investors. As you'll read below, Magellan Midstream Holdings (NYSE: MGG, $13.16) has boosted its distributions at a powerful +40% annual pace over the past few years and now offers a hefty yield approaching +11%. Better still, ongoing expansion projects could lead to even more generous payouts in the near future.

Good Investing!

-- Nathan Slaughter
Co-Editor
TopStockAnalysts Digest

Through its wholly owned Magellan General Partner, which in turn owns Magellan Midstream Partners (NYSE: MMP), Magellan Midstream Holdings (NYSE: MGG, $13.16) operates pipelines and storage terminals to ship refined petroleum products and ammonia from the Gulf of Mexico to markets in Illinois, Minnesota, and Colorado.

Its ownership position entitles MGG to receive 2% of the cash distributed by the operating company MMP, together with increasing percentages of any incremental cash distributed by MMP. Structured as a limited partnership, MGG must pass along most of this investment income to shareholders.

In other words, MGG's shareholders are the prime beneficiary of any dividend increases by its operating company. Not only do they get a piece of MMP's dividends, they also get a bigger piece of the rising dividend every time the dividend is boosted.

For example, when operator MMP announced a quarterly dividend hike earlier this month that equated to +9% year-over-year, parent MGG chimed in with a +22% raise. The latest increase brings MGG's quarterly payout to $0.354, bringing the yield to 10.8% of today's price.

Over the past 12 months, the company has paid out $1.26 per unit in dividends on $1.32 per unit in earnings, giving it a 96% payout ratio. Most of the dividends are considered tax-deferred return of capital, so the stock is best held in a taxable brokerage account.

MGG's per-share earnings have grown an average +40.4% over the past three years through 2007, while the annual payout rate has soared +240% since the company initiated dividends in 2006. Profits are tied to the volume of petroleum products shipped through the company's pipelines and stored in their terminals. Reduced demand for refined products could affect profits, but tariff increases pegged to the Producer Price Index should help offset some of the earnings shortfall.

Growth will also be driven by ongoing expansion projects and acquisitions. And given the company's strong balance sheet, it isn't planning on going to the capital markets to raise cash for these projects. CEO Don Wellendorf of Magellan Midstream (MMP) told shareholders the partnership will use internally generated cash flow to fund its slate of expansion projects and draw upon its existing $550 million line of credit to take advantage of potential acquisitions.

While we are inclined to sit tight until the dust settles on Wall Street, some opportunities are extremely enticing. MGG is one of them. This cash-rich dividend grower is still trading near its 52-week lows. For income investors willing to withstand some inevitable volatility in order to capture a double-digit yield, MGG offers excellent long-term value.

For those looking to bottom-fish for high-yield stocks and bonds, but with the diversification and safety of a managed portfolio, Evergreen International Balanced Income Fund (NYSE: EBI , $10.10) is a good option. The closed-end fund's management team at Evergreen Investments is solid and experienced; the equity portfolio of the fund is run by Francis Claro, who has been working in the investment management field since 1986. The fixed-income portion is managed by Anthony Norris and Peter Wilson, who, along with their team, have over 30 years of combined experience in fixed-income securities.

The fund's balanced approach -- a 60/40 mix of stocks/bonds -- limits volatility and boosts income, as bonds are higher-yielding and carry less downside risk or upside potential compared with stocks. To boost yields further, the fund's managers write calls on international indices against about half of the equity portfolio. While this limits upside in rising markets, it bring in copious amounts of cash for dividend payments.

The fund's top sectors include utilities (13% of portfolio) and telecom stocks (11%) -- steady eddies that tend to hold their own during recessions. One of the fund's top holdings is France Telecom, one of my favorite foreign dividend plays. Other holdings include bonds issued by Norway, Mexico and Canada, coupled with stocks like Unilever and Nintendo. No single holding makes up more than 3.5% of the portfolio.

EBI is diversified geographically, which limits the risk of a market meltdown in any one country. The top country weightings are the U.K. (17%), France (11%), Germany (8%), Norway (7%) and Canada (5.5%).

The fund currently trades at a huge discount to net asset value (NAV) of -22.1%. That means you're buying $1.00 worth of portfolio holdings for only $0.78. Even if the underlying portfolio remains flat, you could profit nicely from the discount narrowing -- not to mention the hefty 17.3% dividend yield.

The fund has paid a monthly dividend of $0.1458 per share since December 2007. Given the current environment, it's likely some of the fund's holdings could cut their dividends in the coming months. That said, it's hard to envision a scenario where the fund doesn't generate a double-digit yield over the next year, thanks to its focus on relatively stable sectors.

If you're looking for a high-yield, one-stop fund that gives you a diversified mix of foreign stocks and bonds, the Evergreen International Balanced Income Fund fits the bill right now. This isn't for the meek at heart, as some of its holdings almost certainly will cut their payouts in the coming year. But even if they do, that doesn't necessarily mean EBI will, and the fund's total dividend yield probably will remain in the double digits.