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April, 2004

IN LIEU OF BONDS: A LOW RISK, HIGH YIELD PORTFOLIO
by LARRY

With money market funds and bank accounts paying less than 1% a year and bonds volatile, yielding only about 3-5%, and subject to severe declines in principal as interest rates and inflation begin to rise, where is an investor to turn for dividend income and relative safety in uncertain times?

One answer is a carefully selected growth and income portfolio. By picking stocks with both higher than average safety or financial strength ratings and a superior dividend yield, one may achieve an alternative to bonds that provides a competitive yield while sacrificing little total return to that projected for major market benchmarks, such as the Standard and Poors 500 Index.



In the following proposed ten-stock safety first portfolio, not only is the current average dividend (4.4%) roughly equal to or greater than that offered by a U.S. government bond portfolio, but some of the assets are likely to have dividend increases over the next several years (something bonds generally don't offer). Their anticipated overall 3-5 year total annual return (approximately 10%) rivals that of the S & P 500 for the same period.

StockSymbolPriceEst'd
Annual
3-5 Yr.
Total
Return		Current
Dividend
Allied Capital Corp.ALD$26.2916.5%8.7%
Genuine PartsGPC$33.2616.5%3.6%
Consolidated EdisonED$42.135.5%5.4%
MGE EnergyMGEE$30.894.5%4.4%
Royal Dutch PetroleumRD$48.7112.0%3.0%
BP PLC ADRBP$53.1913.0%2.9%
Chevron TexacoCVX$91.306.0%3.2%
Merck & CompanyMRK$45.3810.0%3.3%
Shell TransportSC$41.6412.5%4.0%
SBC CommunicationsSBC$24.186.0%5.2%

(Data effective 4/14/04)



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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