The Slow Growth Portfolio
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The Fed is telling us that short term bond investments, while safer than stocks, will not be providing much yield for the next two years at least. Given the low yields of CDs, money-market funds, and Treasury securities, skittish investors might consider combining a mix of these “safe” investments with a 20-30% exposure to high quality dividend-paying stocks. Even if the stock part of the portfolio remains unchanged a year from now, their dividends will allow the overall portfolio to grow at a decent rate. Obviously, if the companies continue to perform as in the past, their share prices could gain nicely.
We list a few of the many large companies in a variety of industries with a long history of annual dividend increases that are trading at attractive current yields:
Abbott Labs (ABT) - Drugs 3.65%
Chevron (CVX) - Energy 3.20%
Intel (INTC) - Semiconductors 3.70%
Johnson & Johnson (JNJ) - Diversified Health. 3.55%
Leggett & Platt (LEG) - Diversified Manuf. 5.20%
McDonalds (MCD) - Restaurants 3.20%
Microchip Tech (MCHP) - Semiconductors 5.05%
Plains All Amer. (PAA) - Energy Pipeline 6.50%
Average yield = 4.25%
Average Money Market yield = .05%
Ten year U.S. Treasury bond yield = 2.20%
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Prices and yields as of mid October, 2011. The above information is believed to be reliable but is not guaranteed to be accurate. Investors should check every investment for suitability for his or her particular needs. Investing in stocks is risky and you could lose some or all of your money. Employees of First Georgetown may have positions now or in the future in the above securities.
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