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February, 2011

A LOW RISK, HIGH YIELD EQUITY STRATEGY
FOR THE BALANCE OF 2011 AND BEYOND
by LARRY

With short-term bonds, Certificates of Deposit, and money market funds generally still paying only about 0.50-2.00% a year and many stocks near or at their highs since the great bear market of late 2008 to early 2009, a saver or investor seeking income yet with growth to offset inflation may be hard pressed to find a solution that meets his or her needs.

Annuities provide options that may be helpful for some. Yet they can lock one into an approach that ties up funds for the long-term and can be more expensive, since those brokers and insurance companies need compensation for the extra money management responsibilities and risks they are assuming.

Another stratagem is to invest in a portfolio of stocks which overall are providing at once higher yields than short-term savings instruments and lower risks than the major market averages. These may then be held for their growing income stream and/or redeemed later, once the price per share has gone up significantly, and replaced then with other lower risk, higher yielding shares of stock.



One may think of this kind of investing as like planting, cultivating, harvesting, composting, and replanting a home garden. Using such a green thumb metaphor, here are some Big Boys (juicy tomato plants) that offer excellent produce and/or growth potential.


CompanySymbolRecent
Price
DividendDividend
Payout
Ratio
Price
to
Earnings
Air T, Inc.AIRT$9.703.40%41.00%12.08
Cal-Maine Foods, Inc.CALM$28.803.00%30.00%9.12
Comtech Telecommunications Corp.CMTL$28.623.50%10.00%11.91
Chevron Corp.CVX$98.723.00%30.00%10.41
Ennis, Inc.EBF$16.613.70%36.00%9.66
Ensco plcESV$53.292.60%16.00%11.60
Intel CorporationINTC$22.143.30%31.00%10.80
Novartis AGNVS$57.312.90%39.00%13.45
Telular Corp.WRLS$7.715.20%45.00%3.16
V.F. CorporationVFC$89.802.90%46.00%17.07


No equity investment plan is without risk. However, a portfolio of assets tends to do well over time when each has at once more growth or income potential than the average stock and greater safety.

As usual, we recommend that, before investing, one do proper research into the securities in which one is interested and/or consult a trusted financial advisor.



DISCLAIMER

Larry is not a professional. Don't take him seriously!

Actually, the investment article provided here is for general information only and should not be considered as professional advice, a solicitation to buy or sell any security, or the Word of God. Investors are encouraged to do their own research while considering their personal goals and circumstances, or consult their own professional financial advisors, before making investment decisions. Neither Larry nor LARVALBUG will be liable for any losses sustained by any visitor to this site.

(Disclosure statement: Larry and Val have holdings in some of the suggested assets but do not "make a market" in any of them and do not derive any direct benefit from recommending them, except perhaps for a bit of smug self-satisfaction.)



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