5 stocks for your kid's portfolio
You're never too young to begin investing. These are names your children will recognize.
By Bret Kenwell
Have you ever tried to look at the investment world through a child's eyes?
What would our kids buy if they were in our shoes? Not what stocks children should buy, but what they would buy. You might be shocked at some of the quality choices that come about.
It's almost a given to begin with Walt Disney (DIS). The House of Mouse is a company almost every kid knows. While the first thing that comes to mind is Disneyland in California or Disney World in Florida, the network shows and animated movies sure do hit home for most kids.
Just as investors and traders anxiously await the nonfarm payrolls report each month, children around the world await movie releases such "Monsters University" or "Cars." Their dream is to go to Disneyland and meet the characters that have entertained them thus far through life.
Children would also appreciate the company's exuberant growth of recent years. Disney acquired Marvel in 2009 and most recently Lucasfilm in 2012 in an effort to boost its movie diversification beyond Disney and Pixar films.
The company also boasts impressive theme park numbers and has continually proved to the doubters that consumers will still take their children to theme parks despite the economic woes. Kids know this, and that's why they'd be buyers of Disney. There's even a dividend, albeit a small one.
Sticking with the entertainment theme, most kids love rollercoasters. So what better place to go than Cedar Point, owned by Cedar Fun Entertainment (FUN)?
Cedar Fun is regionally operated. Depending on where the kids are, they might opt instead for Six Flags (SIX). While the economy is not exactly robust, these two companies continue to see increased park traffic. With the summer about to start and a decent economy, expect to see sales continue to grow over the next six months.
Of course, the Cedar Fun and Six Flags dividend payout is nice, too, yields of 6.1% and 4.8%, respectively. While our kids look for fun, they can also consider the benefits of receiving distributed income in order to pay for those annual passes.
Here's another area that would interest a kid: snack time. Kids love to chow down. Looking for a food company, look no further than Kraft (KRFT).
While the youngsters may not be ready for Maxwell House or A.1. Steak Sauce, they are sure to appreciate brands such as Capri Sun, Jell-O, Kool-Aid, Lunchables and Kraft Mac n' Cheese.
Shares have erupted nearly 23% year-to-date and future growth will likely always be there as long as kids keep eating.
The 3.6% dividend yield is also nice, despite the large run in share prices. The company will likely continue acquiring large brand-name foods that are enjoyed around the world to maintain competitive shelf space among grocers.
Perhaps it's the solid dividend that would attract this generation of kids to these stocks. This next stock yields close to 3.25%, is up 22% this year, and makes Barbies, Polly Pockets and Hot Wheelz.
Mattel (MAT) began operations in 1948 and has been going strong ever since. Mattel also makes American Girl dolls and gets these kid-investors started early with their brands through Fisher-Price.
Some savvy kids could double dip by gobbling up shares of the 3.6% yielder Hasbro (HAS).
The toy company is responsible for brands like Nerf, G.I. Joe, Transformers and Marvel action figures. It also has board games such as Twister and Hungry Hungry Hippos, making this another obvious choice for youngsters.
Finally, what kid doesn't like to get a meal with a toy? Better yet, a Happy Meal from McDonald's (MCD)?
The Golden Arches introduced the Happy Meal in 1979 and it has been a winning strategy. McDonald's is one of the most recognizable brands around the world for just about any age group.
Toss in a PlayPlace and kids could spend hours in a Mickey D's. So why not invest in it?
Although McDonald's, at 11.5%, has underperformed the S&P 500's ($INX) 14.5% growth, it does have a 3.1% dividend yield and has one of the most consistent payouts in the industry.
It's clear that while the kid-approved portfolio is certainly tailored to their liking, the stocks have a responsible focus on balancing growth, stability and income. With the exception of Disney, all the companies above have a yield north of 3%.
While kids might invest in names they can recognize, they might also care about the importance and efficiency of compound growth, which will pay for future summer vacations down the road.
At the time of publication the author was long DIS and MCD.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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