March 1st, 2012
Written by Mark Bern, CPA CFA
This last week I focused on dividend-paying stocks, as usual, and primarily on consumer goods companies in particular. In addition, I often recommend using the sale of options as tools to manage a portfolio, taking most of the emotion out of the decision-making process and enhancing the income stream at the same time. This week was no exception but I did not stress the sales of options as in many prior weeks, but rather focused on finding companies that provide investors with long-term potential total returns. Click on graphic for larger image.
Follow up:Let’s picked up where I had left off from last week by writing about the prospects for Deere and Company (NYSE:DE). Deere has rallied about 40% in the last 4 ½ months so I wanted to look at what was behind the outperformance and get an understanding of what that does to the near-term prospects for the stock as well as the long-term outlook.
Then I published an article about Cummins (NYSE:CMI). Several press releases were cited from Americas Commercial Transportation Research (ACT Research) about the demand for Class 8 trucks. I also included a link to the Cass Freight Index which tracks shipments and volumes in North America for all forms of transportation as reported in ACT Research’s January Report, to provide third-party support for my enthusiasm based upon demand for new trucks and how it relates to prospects for CMI in 2012 and beyond.
The third major piece is entitled, “GE and the Eurozone: A Tale of Caution for Dividend Seekers.” General Electric (NYSE:GE) has made some steps in improving its profitability, but it is also highly dependent upon North America and Europe for the bulk of its revenues, A recession in Europe, even if shallow, will be felt by GE’s bottom line.
I foresee opportunities for Tupperware (NYSE:TUP) in emerging markets and discuss why in my article, “The Tupperware Advantage in Emerging Markets.” Remaining within the consumer goods sector I wrote about Colgate Palmolive (NYSE:CL) and the case for the company’s record of 48 consecutive years of rising dividends being likely to continue for the foreseeable future. See “Searching for Rising Dividends: Colgate-Palmolive.” Next I took a look at Procter & Gamble (NYSE:PG) in “Proctor&Gamble a Rising Dividend Star” and one of my old favorites, General Mills (NYSE:GIS), in “Searching for Rising Dividends: General Mills”.
The week ended with an article about McCormick (NYSE:MKC), “Add Some Spice and a Rising Dividend to Your Portfolio,” a stock I see having excellent growth potential for the future to go along with its record of increasing its dividend in each of the last 24 years. Perhaps the best part about this article was the discussion in the comments section that followed the article with entries from inhabitants of India, China and elsewhere. The discussion was lively and very informative and ending up supporting my thesis for growth in emerging markets around the world.
Finally, I want to make readers aware of my ongoing series entitled, “My Long-Term, Enhanced Investing-for-Income Strategy.” It begins with a detailed explanation of using puts and calls for managing your portfolio. Think of selling a put as a means of placing a limit order and getting paid for placing it. I think that you will agree that creating a return of 8% - 10% on your cash while you wait patiently to buy at bargain prices is preferable to placing orders below the market in hopes of getting a bargain and earning nothing on your cash while you wait. That is just one aspect of the strategy and you can find the original article at this link. If you are wondering how the strategy is working so far, you can find the results in the latest summary article.
In coming weeks I will be looking for more good dividend paying stocks and further discussing how investing in such vehicles, along with the use of option strategies, can produce high yielding portfolios accompanied by opportunities for attractive capital gains.
Investing articles by Mark Bern
Other Investing articles about dividends