With the market and economy as it is, there are many sound bytes to catch on what should one do with savings. Nothing seems sure. Stocks seem to be the "falling knife", gold seems too be highly inflated beyond its true value, treasury is backed by a non AAA country (!!). So, why not add my two sound bytes to the noise?
I am old fashioned. I like stocks and the old world thought process on stocks. In times of slowdowns and recessions, I caught words of an old man who was talking on TV. He talked about Altria (NYSE:MO) - a stock that has been somewhat beaten along with the rest of the market. Its a profitable company and relies mostly on its subsidiary Philip Morris - the tobacco company. It has a consistent dividend history and at today's price its dividend yield is 5.91%. So, I used the stock screener on Zacks to look for more. My stock screener was simple. Look for stocks that have a market cap above 1.5 billion $, is currently profitable and has a dividend yield greater than 9%. I was happy to find a stock that I already own. Alliance Bernstein (NYSE:AB). Alliance Bernstein is an asset management firm owned by the french insurance group AXA. They also have funds that they sell to the public. Their earnings history is pretty consistent and did not buckle under the subprime crisis. They seem to be fairly insulated from the credit markets as well. They make most of their money by managing other people's money and providing investment advice. Their stock price has no reason to go up and down just because the general market goes up and down. Their net fund flows could change and that could impact earnings in volatile markets, but that does not seem to have happened. So, I feel, not only is it an undervalued stock, it also is a great dividend play. I am going to double down on my position next week. Another stock that caught my attention was NYSE:PT. That is a telecom company that services Portugal, parts of Brazil and Africa. This has a market cap of 7.8 billion $ and currently yields 11% on dividend. Its currently not profitable, but boasts a good current ratio and good D/E ratio. It is a utility, so is probably independent of consumer tastes. Only major changes in underlying technology can unseat its business. I think it will make a great dividend play to ride out the recession.
