The 10 Best Income Stocks

Plum Creek Timber(PCL Quote): The company raised its quarterly dividend to 36 cents from 35 cents a share on July 27. This is a sign that the timber and forest-products company is succeeding in its drive to realize more of the value of its 8.1 million acres of timberlands by selling selected acreage into the real estate market. The stock now yields 4.6%.

Progress Energy(PGN Quote): The company supplies electricity to fast-growing markets in Florida and the Carolinas, so it has the same kind of demographic trends filling its sails as Florida's FPL. But the stock carries a higher dividend than FPL, 5.3% to FPL's 4.1%, because Progress Energy is still very much a work in progress. For example, the company has a large railcar division that doesn't fit in with the rest of the business and has underperformed. The company plans to sell it, but until that deal goes through, the railcar business is a drag on the stock price.

Rayonier(RYN Quote): Rayonier's two core businesses are turning trees into wood products and performance fibers, and managing and selling its timberland. The stock yields 5.1%, extraordinarily high for the timber industry, thanks to its structure as a REIT after a January conversion. Rayonier has increased its dividend by about 5.5% annually over the last five years. On July 28, Rayonier reported second-quarter revenue growth of almost 14% from the year-earlier period.

San Juan Basin Royalty Trust(SJT Quote): This company doesn't do much of anything -- except pay dividends. As a royalty trust, it collects royalties on oil and gas pumped from its lands in New Mexico. Burlington Resources(BR Quote) does the actual pumping. The trust's monthly payments vary with the price of natural gas, so owning this stock is a pure play on rising natural gas prices. The stock carries a 7.1% dividend yield, but that comes with some interesting wrinkles. Trust owners get a tax credit due to the kind of gas pumped from the company's land. Payouts aren't taxed until the shares are sold because of the way that energy-depletion accounting works. Investors should also note that San Juan is a self-liquidating company: It has only a limited amount of gas, and once that's gone, so are the distributions. Estimates are that the gas should last another 15 to 20 years.