DRIP
Build a Solid Retirement Portfolio in Less Than 60 Minutes
By Mitchell Clark for Daily Gains Letter | Mar 25, 2013
Good investing doesn’t have to be complicated. If you want to save for retirement using the stock market, most individual investors would likely choose a selection of mutual funds or exchange-traded funds (ETFs).
Going forward, a lot of people are viewing the stock market as very vulnerable; unless there is another war or the euro currency really does come apart, the next big pullback is likely to be an attractive buying opportunity for those able to put away some savings for retirement.
A portfolio investment strategy is always crucial, and over the years, I’ve learned to be very conservative with equities. There’s always room for a few highfliers, but I don’t bet the farm on anything.
Putting together a stock market portfolio is easy, and you can just write it down on paper in anticipation of the next big correction.
In retirement planning, it’s highly likely that capital preservation is a top priority, so a stock like The Southern Company (NYSE/SO) or another utility stock might be a good pick. The Georgia-based electric utility has a history of paying increasing dividends to shareholders and capital appreciation on the stock market.
For me, an important group to include in any retirement portfolio with equities is consumer staples. Companies like The Procter & Gamble Company (NYSE/PG), Wal-Mart Stores, Inc. (NYSE/WMT), and PepsiCo, Inc. (NYSE/PEP), to name just a few, are well-managed dividend paying stocks that are highly likely to survive any major shocks in the global economy, and they will certainly benefit from population growth.
A pharmaceutical stock is often a good idea. There are a number of blue chips in this … Read More
One Utility Stock That Beats the Market Consistently
By Mitchell Clark for Daily Gains Letter | Feb 21, 2013
In the stock market, you can do well as a conservative, blue chip investor. You don’t need to speculate in gold, oil, or technology to generate good rates of return. As always, the keys to successful stock market investments are good timing and owning a business that’s growing its earnings.
A lot of conservative investors who are saving or are already in retirement buy utility stocks because of the consistency of their earnings growth and their typically higher dividends. Especially for those investors looking for income, the higher dividends associated with utility stocks are attractive.
One utility with a great long-term track record on the stock market is The Southern Company (NYSE/SO), which is based in Atlanta and operates a number of different plants that generate electricity. The company boasts a great track record of increasing earnings and dividend payments to shareholders; and on the stock market, it has performed more like a growing technology stock. The company’s long-term chart is below:
Chart courtesy of www.StockCharts.com
Of course, the real wealth creation from Southern for investors has come from its increasing dividends, which have been going up consistently. The company’s earnings growth is also relatively consistent; as you might have noticed on the stock chart above, the company has performed considerably better than you might expect from a utility stock.
Owning the right business that’s growing its earnings is key to wealth creation on the stock market. I would argue that a utility like Southern Company is worth considering when it’s down in value. The company has an excellent dividend reinvestment plan (DRIP).
During the 1990s, utilities were shunned by … Read More
