HOLMES BEACH – The spot where Minnie’s Beach Café is located, at 5360 Gulf Drive, has housed a diner for more than 20 years. Recently, a man with a long history at the previous restaurants was eating at Minnie’s with his wife, preparing to go back north.

Jim and Marriette Petitpas now live in Philadelphia, but they purchased a duplex recently in Bradenton, where they hope to live when he finishes his current job in Phillie in a few years.

Petitpas worked at the café when it was Linda’s Sunnyside Up and Brian’s and he was happy to see a familiar tradition was being continued, a three layer lemon cake sitting on the counter by the checkout register.

Petitpas said he started that tradition of the cake, three layers high, iced and uncut – when he worked at Linda’s, which served a very early breakfast for the celebrants who had imbibed too much at Pete Reynard’s and other night spots.

“We would open sometimes as early as midnight so people could enjoy a breakfast and sober up before heading home.” He said. “Some people wanted dessert so I made a three-layer cake, but nobody ate it.

“I started offering a slice with a cup of coffee and the next night, it seemed like the cake flew off the counter,” he said. “Then we started getting calls from people wanting to reserve a piece.”

Petitpas said owner Linda Grieg became a fan.

“I would make a cake while Linda worked the breakfast shift,” he said. “She would finish and sit down to do the books and I would bring her a piece.”

Petitpas said the secret to properly presenting the cake is to leave it on the counter, covered and unsliced.

“When a customer asks for a piece, cut off a slice and serve it,” he said, “It looks fresher that way and they can order the size they want.”

Now Minnie’s bakes a cake per day in season and you can order a whole cake for birthdays or weddings.

Petitpas worked several jobs while he and his wife lived on the Island 20 years ago and they lived humbly in a cottage on the beach near the S curve, in Bradenton Beach.

“There was no air conditioning and we had two daughters who also had to adapt, but every day before the sun set we would gather to watch it hit the water,” he said. “We were so close to the Gulf, waves would hit the roof during storms.

“We moved to Philadelphia 20 years ago,” said his wife, Marriette, “but this is where we left our hearts.”

As they prepared to return to their home up north, Jim Petitpas is happy that the owners of Minnie’s are still keeping the sliced cake tradition alive.

“We’ll be back,” Jim Petitpas said. “This is where we want to be.”

I get a bit nervous when an investment theme becomes too popular, and lately, there has been no shortage of advice touting dividend paying equities as a great idea. However, since this advise is not being rendered with a get rich quick tone, I think it is worth examining the concept of using equities as an income source.

The concept is not new. For the better part of the 20th century, until about 1958, stocks in general paid dividend yields that were higher than the yield on government bonds. For the next 50 years, investing in stocks became more of a growth theme and less focus was placed on dividends by both investors and the companies themselves. For much of the last four years, we have again observed the general yield on stocks, presently about 2.2 percent for the S&P 500 Index, compare favorably with the 10-year treasury bond yield of around 1.7 percent.

But, the analysis of the current yield relationship is hardly the whole story as there are other important factors for investors to consider when investing their capital. So, we will examine the risks and rewards of using equity investments as an income source in the remainder of this article and continue the analysis in part II, which will appear in two weeks, on Sept. 19.

It is obvious to most that equities carry more risk to the owner than a government bond. Businesses sometimes go out of business, and in the case of bankruptcy, equity investors usually incur a total loss of the capital invested. The risk of loss of this type can be minimized by owning a diversified portfolio of companies where any one position is just a small portion of your portfolio. Also, owning larger, higher quality companies can minimize, but not eliminate, the risk of a bankruptcy occurring in your portfolio.

Government bonds carry the guarantee of the issuing government and in the case of the United States, are considered the safest securities in the world for guarding against a default, which would result in the investor receiving less than face value when the bond matures.

But, that doesn’t mean that investing in high quality bonds doesn’t carry other risks. Bonds fluctuate in value as the prevailing level of interest rates moves up and down. Over the last 30 years, the direction of rates has been lower, from the very high levels of the early 1980’s to today’s ultra-low rate environment.

This decline in yields has been like a strong wind in the sails of bond investors, providing way above average performance. But,this trend is not likely to repeat itself in the next 30 years from the current low levels. More importantly, if rates reverse course and begin to rise at some point in the future, bond investors could, at least temporarily, see principal value losses, which are much greater than the income they are receiving on their 10-year treasury bonds presently paying only 1.7 percent.

So, while bonds are an important part of a diversified portfolio, the time may be right to examine equities as income vehicles. In the next segment of this series we will compare the yields presently available on equities to bonds and also examine some other factors that make equities attractive for a long-term income portfolio.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing. Visit www.breitercapital.com.