There was a recent article about Sell in May and go away, which recommends selling one's stocks in May and reentering the market in October. This article maintains that over the past five years this strategy has worked reasonably well. My personal experience agrees with this maxim. It makes sense to reduce one's holdings in May and get back into the market in the fall since stocks often decline over the summer and then begin to revive again in the fall.

If one sells in May, than what? That is the conundrum of a retired person who needs cash coming in steadily to finance one's new car and to pay for one's prescriptions. My answer to this dilemma was to buy preferred stocks that keep the cash coming while I wait till October or November to buy back into the market.

Over the past two weeks while the market

ArcelorMittal Subordinated Notes MTCN (CUSIP L0302D178) closed at $20.46 yesterday. At that price MTCN offers just over 7¼% per share. Originally offered at $25.00 per share, MTCN can now be purchased well below the offering price. It is designed to pay distributions of 6% per annum ($1.50 per annum or $0.375 per quarter) to be paid quarterly on 1/15, 4/15, 7/15 and 10/15 to holders of record on 1/1, 4/1, 7/1 and 10/1 respectively. (Quantomonline.com) This is another preferred stock that must be arbitrarily converted into common stock similar to the one offered by Cliffs Natural Resources CLV that I wrote about in April.

The shares of this preferred must be converted to common stock on 1/15/2016. The conversion rate is based upon a formula that returns the offering price of $25.00 if the selling price of the common is between $16.75 and $20.94. If

Cliffs Natural Resources (CLV) closed at $18.55 yesterday. At that price CLV offers 10.5% per share. Originally offered at $25.00 per share, CLV can now be purchased well below the offering price. It is designed to pay distributions of 7.00% per annum ($1.75 per annum or $0.4375 per quarter) to be paid quarterly on 2/1, 5/1, 8/1 & 11/1 to holders of record on the immediately preceding 1/15, 4/15, 7/15 & 10/15 respectively.

One would think that Cliffs Natural Resources was teetering on bankruptcy with a preferred stock selling this far below $25.00. However this is not the case, CLF is a well run company that's selling its commodity production at lower prices than in the recent past. Bloomberg reported April 24 that the company is handling this downturn reasonably well and reported profits higher than predicted. Rather it is the structure of this preferred that causes people to

Yanzhou Coal Mining Limited (YZC) has been suffering from the recent coal swoon. Anyone who was invested in coal mining stocks over the past year has suffered huge capital losses. YZC has lost about 1/3 of its value also during this period even though the company is located in China. The chart below depicts the decline. ( chart taken from Interactive Brokers )

(click to enlarge)

YZC Yanzhou Coal Mining Company Limited is principally engaged in coal mining, washing, processing and distribution. Its products include raw coal, commodity coal, coking coal and methanol, among others. The Company distributes its products within China and to overseas markets, including Japan, South Korea and Australia. (TD Ameritrade)

Chinese Consumption of Coal

While coal consumption is diminishing in the U.S., coal consumption continues to grow in the rest of the world. The IEA predicts that the world will burn around 1.2 billion more

Last month I suggested a plan to create a mutual fund of regional banks. This month I want to offer a plan to create a mutual fund of electric utilities. The reason to purchase mutual funds is to reduce the risk of putting one's eggs in one basket. Purchasing one fund or ETF immediately offers a diversified investment. Many funds and ETFs are designed to cover a particular industry in order to offer investors the opportunity to purchase a basket of stocks in a specific industry. The reason to purchase an electric utility fund is to have a reliable source of dividends or income coming quarter after quarter with some growth to keep up with inflation.

Building one's own fund allows one to select the companies in the fund. It also avoids mutual fund expenses that can run as high as 5% of one's investment. To create this fund, let's

Clear Channel Communications Inc. offers a 6.875% bond that is due 06/15/2018. The CUSIP is 184502AD4. It is currently selling around $625 to $650 per bond and purchasing it at $640 offers 10.5% interest. Purchasing 5 bonds would cost one about $3200 plus fees and would offer $343.75 interest annually. Assuming the company survives till 2018, it will give one another $460 in capital gains when the bond is paid out.

The Big Question:

The question is, "will Clear Channel Communications survive the next 5 years and be able to repay the principal on the bond?" Clear Channel Communications is not a publicly traded company. However, shares of the Company's parent, CC Media Holdings, Inc., are traded on the Over the Counter Bulletin Board (OTCBB) under the ticker symbol CCMO. The Company's outdoor advertising subsidiary, Clear Channel Outdoor Holdings, Inc., is separately traded on the New York Stock Exchange

With the economy beginning to revive and mortgage foreclosures decreasing, regional banks are becoming profitable again. Investors have been fairly reluctant to invest in them because of the recent past when banks were losing money during the collapse of the housing bubble and the resulting mortgage foreclosures. This reluctance creates an opportunity for the dividend growth investor to purchase some good dividend paying stocks with the accompanying likelihood of capital gains as well.

Mutual funds allow one to buy one fund and have it allocated among different stocks in order to reduce the risk of just owning one company. Some mutual funds are geared to particular industries to participate in an industry that is doing well. Since regional banks are likely to fare well over the next 12 -18 months (S&P), I suggest creating one's own fund of regional bank stocks. One can avoid the charges associated with owning a

Introduction

Gold Resource Corp. (GORO) is the perfect gold hedge for the dividend investor. It is a gold mining company that currently pays $0.06 per month. Currently selling around $13.50 a share, this stock pays a 5.25% dividend. GORO has no long term debt and its P/E ratio is around 12.

For the dividend investor concerned about inflation, this looks like the perfect stock. It pays a good dividend and also mines gold and silver. If the price of gold and silver continue to rise, the value of this company should rise with it.

The Company and Management

GORO engages in exploration for and production of gold and silver in Mexico. It holds a 100% interest in 6 properties in Mexico. The CEO, William Reid, previously held the position of CEO and Chairman of the Board to US Gold. He now spends all of his efforts with GORO

Stock Price History

About 8 years ago a relative turned over management of his investment account to me. As I looked over the account, I saw that nearly 1/3 of the portfolio was invested in General Electric (GE) stock. Without much consideration, I immediately sold 80% of those shares in order to diversify the portfolio and not because I was prescient about the future of GE. The relative was very upset that I sold them because he considered this his core holding and it had done well for him throughout the years he held it. However, 3 years later he was very thankful I sold them because the value of GE fell over 70% and the dividend was cut by 67%. This move saved him thousands of dollars.

At that time GE was hardly making any money on its manufacturing and was highly dependent on its profits from

Background

Codorus Valley Bancorp (CVLY) is the largest full service community bank headquartered and managed in York County, Pennsylvania. It currently operates financial centers throughout York County, Pennsylvania, and northern Maryland and plans to expand its franchise. This article is a follow-up on articles written in July and October (see 1, 2, 3) on CVLY. Article 3 also listed several industry positives moving forward that should increase the profitability of small regional banks.

Industry Outlook

Standard & Poor's continues to have a positive outlook on regional banks for 2013. It writes, "For these banks in 2013, we expect a 7% increase in net income on flat net revenues reflecting a 3.0% increase in net interest income and a 4.5% decrease in on interest income. These banks are well capitalized, with an average Tier 1 capital to risk-weighted assets ratio of 12.5% at September 30. In

Evans Bancorp, Inc. (EVBN) is a financial holding company. The company has two wholly owned subsidiaries: Evans Bank, N.A. (Evans Bank or the Bank), which provides a range of banking services to consumer and commercial customers in Western New York near the Niagara Falls area, and Evans National Financial Services, LLC (ENFS), which owns 100% of The Evans Agency, LLC (TEA). The banking business segment includes both commercial and consumer banking services, including an array of lending and depository services. The insurance agency segment includes the activities of selling various premium-based insurance policies on a commission basis, including business and personal insurance, surety bonds, risk management, life, disability, and long-term care coverage. It also provides claims adjusting services to various insurance companies and offering non-deposit investment products, such as annuities and mutual funds. (Source: TD Ameritrade.)

Recent Income Growth

This financial company has regained its footing after the 2008-09 banking

American Software, Inc. (AMSWA) is an IT company (pdf) that provides supply chain software, processing and materials management software, and IT consulting and staffing services. The company derives revenue from three sources: software licenses, services and maintenance. Software license fees are based upon the number of modules, servers, users and/or sites using company software. Services and other revenue consist primarily of fees from software implementation, training and consulting services.

AMSWA has several very strong competitors that include companies such as SAP, Oracle, Infor, JDA Software, Red Prairie and other smaller companies. Some of these competitors have longer histories, broader worldwide presence, better name recognition and greater financial, technical and marketing resources. Management maintains that the company has several competitive advantages such as its complete integrated solutions that deploy quickly, strong customer support and relative ease of use of its software

The company breaks down its earning into three segments;

TAL International Group, Inc. (TAL) leases intermodal containers and chassis. The company has 2 segments. One segment leases and disposes containers and chassis from its fleet and also manages containers owned by third parties. The other segment purchases containers from shipping line customers and other sellers and resells these containers to traders and users for storage or one-way shipment. Formed in 1963, it is one of the oldest and largest lessors of intermodal freight containers. The company's fleet includes over 1.9 million twenty foot equivalent units of dry containers, refrigerated containers, tank containers, open tops, flat racks, chassis, generator sets and palletwide containers.

On October 24, 2012, TAL reported the following:

Over the past several months I have written several articles suggesting that investors should look at regional banks that are paying good dividends. The first article was written in June and covered 3 banks, Univest (UVSP), Ohio Valley Banc Corp (OVBC) and People's United Financial (PBCT). The second article was written in July and covered Susquehanna Bancshares (SUSQ), Fulton Financial Corp. (FULT) and Wayne Savings Bancshares, Inc. (WAYN). I invite readers to look back at those articles to get the background on these companies and the reasons for investing in them. This article is an update on these banks to ascertain that they are all headed in the right direction.

This update tracks the latest quarterly reports on profitability, checks to see if there are changes of inside ownership, looks at changes in dividend payments and plots the price movements over the past 6 months. The plan is

Cross Timbers Royalty Trust (CRT0 is an express trust. Net profits interests are the principal asset of this issue. It has net profit interests in properties in Texas, Oklahoma, and New Mexico. These were properties owned by XTO Energy, Inc. and are operated by XTO. Bank of America, N.A. is the trustee of the trust.

Below are some graphs to help understand the history of the trust:

Click to enlarge images.

The chart directly above shows that CRT is close to its low for the year. It had a high of just over $50.00 per share in January and is now selling for just over $26.00 per share. The reason for this sharp slide is the declining dividends. The dividend in December of last year was over $.25 per month. The dividend in November of this year was under $0.19 per share. Investors are wary because the trusts assets are

Westfield Financial Inc. (WFD) is the bank holding company for Westfield Bank. The main office of the bank is in Westfield, Massachusetts with 10 other offices located in Hampden County, Massachusetts. It has been in business since 1853 and offers loans, lines of credit, cash management services, internet banking and an ATM network to its customers. The price of the stock is now near its low for the year and offers a great buying opportunity. See the graph below taken from Interactive Brokers. (click to enlarge)

7 Reasons to buy WFD now:

1. Michael J. Janosco Jr., the Chief Investment Officer, purchased 30,000 shares at an average price of $6.64 per share on 11/21/2012.
2. Book value per share as of 9/30/2012 was $8.37. Book value is over 15% higher than the share price as of 11/28/2012.
3. Allowance for loan losses is $8.2 million which represents 282% of

Nokia (NOK) has been hit hard recently with the shift to smart phones. This has driven the earnings and stock price of this Finland company down. However Nokia sold 82.3 million phones during the last quarter and sold more phones than Apple (AAPL) by 23.55 million. Yet investors are somewhat concerned about the company because Nokia's new Lumia smartphone has not yet gained traction.

The Lumia smartphone uses Microsoft's Windows 8 operating system. There are still questions whether this OS will be a winner in the marketplace. Furthermore there are able competitors making inroads into Nokia's cell phone business. Apple, Samsung (SSNLF.PK) and Research in Motion (RIMM) are successfully marketing smart phones that have taken market share from Nokia. Microsoft (MSFT), which is partnering with Nokia with the OS, may soon offer its own smart phone independently. Google (GOOG) is also offering its own smart

Cushing MLP Total Return Fund (SRV) is a closed end investment company that invests in MLPs. The fund's objective is to obtain a high after-tax return from a combination of capital appreciation and current income. The fund has been paying $.225 per share since 2009. The stock price of the fund is $8.56 as this article is being written. The distribution rate is over 10% at the present price.

Several months ago I purchased several hundred shares of SRV for my portfolio and added it to some of the accounts I manage for others. Since that time the price and NAV of this fund has been declining. NAV at the beginning of the fiscal year was $7.74 per share. As of 10/31/2012 the NAV of the fund was $6.86, almost a dollar decline per share. See the graph below from Interactive Brokers to track the price decline.

(click

I have owned SEP Spectra Energy Partners for about a year. Recently the price of SEP has shown weakness. Considering that SEP has increased its dividend 18 consecutive quarters, I decided to do a review of this investment to see if there is a fundamental reason for this decline. Check the annual price movement chart below from Interactive Brokers (click to enlarge).

Background

SEP gathers, transports and stores natural gas through 3200 miles of interstate pipelines. This is a fee-based stable business with no direct commodity price exposure with long term delivery contracts. It operates in the southeastern quadrant of the U.S. with storage facilities in Texas, Louisiana and Virginia. On July 1, 2011 the partnership bought the Big Sandy Pipeline from EQT Corporation.(TD Ameritrade) It also just announced the purchase of 50% of a 77% interest in Maritime & Northeast Pipeline from Spectra Energy

Recently a friend stopped at the house to get investment advice. He told me his CDs had come due and was looking for a place to put his money. He had been getting 5% on his CDs but now they were offering a little over 1%. I told him to take his money out of the bank and to buy the bank. I suggested that he could easily get 5% or better annually by buying small regional bank stocks.

Small regional banks offer a great opportunity for dividends and growth during this part of the economic cycle. S&P maintains that the fundamental outlook for regional banks for the next 12 months is positive. Credit quality of the banks continues to improve and charge offs as well as non-performing loans continue to come down. Most regional banks have learned their lesson from the last downturn in the economy and are doing