This debate is as old as “guns vs. butter” but it has intensified in the past decade as interest yields have collapsed. As we “head to the Fed” meeting next month a 10 year treasury note gets you 2.06% and we are told that a rate cut is on the way. There was a time when you could buy a stock like GE and get a good yield plus some hope for appreciation. That time ended two years ago.
This trend of low interest rates has put a lot of pressure on alimony as a device to make up for bad yields. But, alimony is a remedy infected with misery. Heck, they even removed the deductibility beginning this year unless you have your deal in place.
July 30th an article published by Charles Sizemore in Kiplinger’s online magazine “11 Stocks to Buy That Prove Boring is Beautiful” produced a ray of hope. Sizemore identified 11 stocks that produced a healthy dividend without being investments at risk of either a price collapse or a dividend cut. Nothing in financial life is certain and some readers may cringe when they see Altria (the old Phillip Morris) on the list. But, we are looking for income and Sizemore’s picks seemed worthy of some consideration.
Here is the list with the stock symbol and the current yield:
Combined: 58.3/11 = 5.3%
So that’s an average 5.3% return with at least some prospect for dividends being qualified for capital gain rates. It’s also a reasonably diversified portfolio, which includes real estate, manufacturing and retail.
As attorneys we often are asked, “If I get $300,000 in assets I can invest, what should I expect as a return?” Treasuries have provided little solace for quite some time and it seems it will get worse before it gets any better. However, there are dividend stocks out there and Kiplinger’s may be on to something offering a ray of hope.
Yields are a moving target as we noted in our last post on this subject on February 9, 2017.