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By Carla Pasternak

If you want to earn 4-5% a year -- the conventional wisdom goes -- then income stocks are for you. If you want to earn higher returns, you better look elsewhere. In fact, income payers have even been nicknamed "widow and orphan" stocks for decades, because their stable and predictable returns appealed to the most conservative investors.

But sometimes the conventional wisdom gets it wrong. How else can you explain the income payers we've found that have returned 538%, 733, 2,270% and even more over the past decade?

This is what we found a few days ago, when a member of our research team tracked down the best-performing high-yielders of the past 10 years. In total, 18 stocks yield more than 6% and have had a total return of more than 500% during the past decade.

But one stock took the cake: Terra Nitrogen (NYSE:TNH). This investment currently yields 6.0%, and in the past decade, it's returned 6,380% -- enough to turn a modest $1,000 investment into $64,800. The Sioux City, Iowa, master-limited partnership sells nitrogen fertilizer to farmers in the central and southern United States.

So why has a company that makes a "boring" product like fertilizer soared more than 6,000%?

Demand for food commodities of all types is soaring. Prices for wheat have risen 180% since 2001. Corn has risen from under $3 per bushel to more than $7 per bushel during the same time. This has sparked demand for fertilizer to boost crop yields, causing fertilizer prices to zoom as well. In the past year alone, prices for Terra Nitrogen's fertilizers have increased 47%. This support behind prices has caused the partnership's sales to rise dramatically. In the trailing 12 months, Terra Nitrogen has seen revenue of $673 million -- more than 120% greater than a decade ago.

As an MLP, Terra Nitrogen must distribute all available cash after expenses to the general partners and unit holders. In the past year, the company has distributed quarterly payments totaling $11.35 per unit. This works out to an annualized yield of 6.0% at recent prices. While the distributions vary with earnings, the overall trend is sharply higher. In 2007, Terra Nitrogen distributed a total of $7.64 per unit, but only $1.92 per unit in 2006. Investors were paid just $0.44 per unit in 2001.

I'm not suggesting you run out and buy into Terra Nitrogen. In fact, after an explosive run-up since May, I wouldn't rule out a pullback in the stock. But if you've held on to the notion that earning an income stream from high-yield stocks means giving up strong returns, I hope you're seeing this is simply not the case.

Disclosure: Neither Carla Pasternak nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

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Source: Is Terra Nitrogen The Best Income Stock Of The Past Decade?