7 stocks with high dividends and stable prospects
A fund manager describes how he built a 'bulletproof' portfolio for today's skittish investors.
By Gene Marcial, Forbes
True, the stock market has been on fire, shooting up to new record levels and could even post higher highs over the next few months. The beauty of this market is that despite its current buoyancy, there are still a big number of skeptics who are convinced the raging bull isn’t for real. Why? They remember only too well what happened during the financial meltdown, which was exacerbated by a long recession. In a sense, they represent the army of still skittish investors who may yet join the parade, potentially a big upside plus.
But admittedly, it will take a lot of convincing for them to sally back into the market. A large number of people still worry about a slow-growth economy and are very suspicious of the market, even though equities have run up sharply since August 2009.
"It’s been very difficult -- almost impossible -- to convince investors who were badly burned to restore their faith and confidence in the market,” says John E. Maloney, CEO and Chief Investment Officer of M&R Capital Management. "We found very high demand for investment vehicles that could consistently provide steady income with the least risk involved," he says. The promise of high-performance returns from 'super stocks' no longer counts with these people. 'What they want,' notes Maloney, 'is a portfolio generating a steady and decent flow of income that will weather a financial storm like the still-unforgotten financial crisis of 2008-2009.'
So M&R Capital, which manages nearly $500 million, designed a portfolio with this in mind. M&R Capital’s income-stream portfolio, described by Maloney as bullet-proof as they come, consists of 60% stocks, 30% long-term bonds, and 10% Trust Preferreds. Maloney says that overall, the portfolio carries an average yield of 6%, with a volatility for the stock portion that is half of a typical equity account. So if the portfolio’s equity assets grow by about 5% to 6%, that’s a big bonus to the attractive 6% yield --with good downside protection.
Here are 7 out of 24 stocks that Maloney has chosen for his 'bullet-proof' income-stream portfolio:
- Altria Group (MO), the largest U.S. cigarette producer (formerly Phillip Morris), is trading at $26 a share with a p-e of 12.9, and has a dividend yield of 5.8%.
- AT&T (T), the giant phone company currently trading at $30 with a price-earnings ratio of 12.9, provides a dividend yield of 5.6%.
- Cellcom Israel (CEL), which provides cellular phone services in Israel, trades on the New York Stock Exchange (NYX) with ADRs, now selling at $31, with a trailing p-e of 9.5. The company pays an alluring dividend yield of 8.9%.
- France Telecom (FTE), the giant French telephone, cable-TV and Internet company, whose ADRs sell on the New York Stock Exchange at $22, sports a relatively low p-e multiple of 9.5 for a telecom company. Its dividend yield is an attractive 6.6%.
- National Grid (NGG), a London-based utility company that owns and operates regulated electricity and gas networks in the U.K. and U.S., trades on the New Stock Exchange with ADRs, now at $49, with a p-e of 11.4. Its dividend yield is a healthy 5.6%.
- Plains All American Pipeline (PAA), a limited partnership engaged in interstate and intrastate crude oil transportation and provides terminal and storage services, is trading at $64 with a p-e of 20.7. The company pays a dividend yield of 5.8%.
- Verizon Communications (VZ), which provides wireline, wireless, and broadband services primarily in northeastern U.S., trades at $36 with a p-e of 17, and provides a comfortable dividend yield of 5.2%.
Read the full article and see more of Gene Marcial's Street Beat columns here.
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