5 Horrible Stocks for Retirees

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High yields are one thing, but these five companies are flashing warning signs.


The commodity downturn has hit the midstream and limited partnership spaces hard. There are undoubtedly huge investment opportunities to be found for income-focused investors. But if you're a retiree, capital preservation is just as important as generating income, and these five companies with massive yields of as much as 30% are horrible stocks for you to consider.


Pain in the partnership
The first company with a huge but risky yield hails from the midstream oil and gas sector. Midstream companies generally provide services to oil and gas drillers, helping them get their products from where they are drilled to where they are used. To be fair, the services they provide are truly vital.

But here's the problem: Many of these companies haven't been able to cover their distributions out of the cash flow they're generating. For example, American Midstream Partners(NYSE:AMID) ended 2015 with a distribution coverage ratio of just 0.81 times. With a distribution yield of around 28%, it's pretty clear that investors are concerned that the distribution won't hold, even though management suggests that it will be able to cover 2016 distributions at least 1.1 times over...
Source: The Motley Fool