Hundreds of investors ask me questions each year about the dilemmas they confront. Their worst problem? Uncertainty. They are traumatized and become emotional or confused to the state of inaction. Even worse, they try to solve a short-term problem in a way that hurts them financially in the long run. My solution is to keep it simple: Buy the stocks of great companies at reasonable valuations.
Here are five everyday investor dilemmas and my easy stock solutions.
Dilemma: You need cash flow, but it’s a scary world. A ten-year Treasury pays just 1.8%. If you are prepared for some risk, junk bonds pay about 5%, but they tend to get whacked when interest rates rise. Same with lower-yielding but higher-quality corporate bonds.
I have long advocated a safer approach if yield is what you crave. Buy big-cap stocks. I like America’s largest wireless carrier, Verizon (VZ, Financial), which has a 4.75% dividend yield. With Verizon, you can expect single-digit growth from a diversified group of consumer and business offerings, plus a boost from added wireless spectrum.
Like any stock, Verizon isn’t immune to short-term volatility, but in the long term it will deliver. It’s cheap at 1.1 times annual sales and 15 times my estimated 2014 earnings. Beats T bonds by a mile.
Continue reading.
Here are five everyday investor dilemmas and my easy stock solutions.
Dilemma: You need cash flow, but it’s a scary world. A ten-year Treasury pays just 1.8%. If you are prepared for some risk, junk bonds pay about 5%, but they tend to get whacked when interest rates rise. Same with lower-yielding but higher-quality corporate bonds.
I have long advocated a safer approach if yield is what you crave. Buy big-cap stocks. I like America’s largest wireless carrier, Verizon (VZ, Financial), which has a 4.75% dividend yield. With Verizon, you can expect single-digit growth from a diversified group of consumer and business offerings, plus a boost from added wireless spectrum.
Like any stock, Verizon isn’t immune to short-term volatility, but in the long term it will deliver. It’s cheap at 1.1 times annual sales and 15 times my estimated 2014 earnings. Beats T bonds by a mile.
Continue reading.
