Don’t waste time trading the new Obama presidency.I say that, in a market this tough, investors want a diversified portfolio full of dividend-paying stocks.
My five favorite Dow stocks for 2009: Johnson & Johnson [JNJ], Caterpillar [CAT], Hewlett-Packard [HPQ], Verizon Communications [VZ] and Home Depot [HD].
My fave 5 have been down 3% since i start recommending these stocks, during the week of Jan. ? But the Dow’s dropped 8% over the same period, while the S&P 500 has slipped 9%. That’s relative outperformance by the fave 5. And if they held up well during this downturn, there’s a good chance they’ll rebound first when the market turns up.
Consider the dividends, too, which are a big reason I picked these stocks in the first place. Other than Hewlett-Packard, all of these companies pay more than 3%, Verizon as much as 6%. Once you factor in the quarterly dividends, the All-Star portfolio is down only 2.1%. With the returns from the annual dividends, the portfolio’s actually up a half percent.
Dividends account for about 50% of a stock’s appreciation. They offer much-needed protection during volatile markets, and they boost your return. Plus, other investors are attracted to the increasing yields as the share price drops, further buoying the stock. This is at least partly why my fave 5, have the Dow and S&P.
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