Personal
Portfolio
The Year End Results! A year or two more of returns like this will undoubtedly hasten retirement.
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Financially Speaking, It was a pretty good year.
The US and Canada look like good places to be in 2011
and the bulk of the portfolio is probably going to stay right here at
home.
The latest housing news has been lousy, as
has been the employment scene. More chatter about a housing
double-dip which I think makes some sense.
One sector I
am intimately familiar with is the power generation and transmission
sector. This area has been firing on all cylinders. At some
point more power means more usage and more usage will in theory
mean more jobs.
Stocks are cheap right now and volume is still quite light.
If sentiment changes this year, it could be profitable one.
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Personal Portfolio
The Yearly Evaluation
Once
a year it's a good idea to run your holdings through
Morningstar's Instant X-Ray to get a true picture as to where your
assets are allocated. Compared to the S&P 500, I'm
light on IT, heavily favor financials, light on health care and heavy
on cyclical growth. That looks ok to me, but I will be reducing
financials a bit.
Instant
Xray (the free service) also provides you with YTD returns of the top
ten holdings and the percentage of total assets they represent.
I am
overweight Goldman Sachs and plan to stay that way for a while.
I picked it up in the 140's and I still think it's cheap.
What's New for 2011?
Best Buy got Creamed when they missed earnings.
The
stock is sitting near its 52 week lows, the PE is more than
reasonable and a Beta of 1.4 suggests the stock price can move rapidly,
and hopefully in the upwards directions.
Another thought
about this stock - gift cards. Those aren't counted until they
are redeemed and I would imagine Best Buy sells a ton of gift cards.
I
personally like Best Buy and do a lot of shopping there. The
thing I wonder about is the impact discounters like Walmart and Target
will eventually have on sales. I would have to say I am bullish
short term and neutral long term, and am therefore adding this to the
portfolio.
Weyerhauser is in the process of converting itself into a REIT and is part of my strategy to think a bit outside the box.
The large drop seen here is the result of a one-time distribution to share holders, ridding itself of excess cash.
Opinions are quite varied:
And from the horse's mouth:
And from CNBC
I
think this could be attractive as a long term hold and I rate it for
2.5 % of the portfolio and with NLY comprising 3.5%, there should not
be much of a downside from these levels going forward.
Dividend Paying Stocks vs Bonds
I've
been encouraging this route for a while now because stocks are cheap,
yields on the dividend paying stocks can be quite high,
much higher than yields on treasury notes or bank savings
accounts. Reinvest those dividends in more shares of stock and
with any luck you will end up with more shares and a higher share
price. You can't do that with bonds.
The 15% tax cap on dividends is in place for another two
years, which means dividends in a taxable account are a cost effective
way to increase your portfolio while paying a minimum of taxes.
Banks Currently Paying a Whopping Penny a Share - What about them?
The
rumor mill has it that a number of financial stocks are going to be
raising their dividends from the penny a share they are currently
paying to something more appetizing now that most have met their
capital requirements and are working on getting out from the boot of
big brother.
BAC and HBAN are both paying out a penny a share
and Citi pays nothing. As the economy improves and banks actually
start lending more and more people get hired, these stocks are
worth consideration if one is looking for upside potential in the share
price and the dividend.
I have a love/hate relationship with
BAC, I'm neutral on Citi, and HBAN was one of my best performers
for the year. We'll see what the new year brings.
Here are three current dividend payers I like:
I
own all three and as you can see, I've had nice share
appreciation coupled with a generous yield this last year. You
won't see that with a typical bond holding. The forward PE on all
three suggests that these stocks are still not fairly priced and have
room to run.
Jim
Cramer devoted a few minutes to the idea and I learned something I did
not now about short sellers and dividend paying stocks.
It's Worth a Listen
And....... Here is Cramer's Prediction for the New Year:
Standard poodles are very good at minding everyone else's business, inside or outside the house. |
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