Monday, August 11, 2014

Widows and Orphans.

Years ago stocks that could be counted on period to pay out dividends, be completely safe in preserving capital, keep up with inflation,  and frankly keep widows and orphans comfortable at night were called "widows and orphans stock".   We do not know if there really exists such stocks now, but we do believe there are some very safe picks out there that could allow you to sleep well at night.  One could place equal amounts in the 6 stocks below and forget about them and just collect the dividends and capital gains as needed and not invest in another company period. (Note the absence of electric utilities, until Obama leaves office with his global warming religion and EPA attacks in those companies they remain under pressure.)  

BCE...This steady eddie company, Bell Canada,  is the largest telecom operator in Canada.  They are simply the AT&T in that country.  It pays out a 5% plus dividend and increases the payout regularly.  The stock bounces around between $40 and $45 and rarely moves much at all.  With the broad services such as wireless and wire line this company has a steady revenue and slowly increasing profits.   Telecom services are as safe as one can find now. 

BRK.B...Berkshire Hathaway does not pay a dividend, but the huge cash flow that comes into this company day after day year after year with or without Warren Buffet it is a safe haven for capital gains and selling stock as you need the money to live.  

NNN...Might be the safest stock on the planet right now.  Dividend just under 5% and stock price hangs around $35 and not much more or less period.  The real estate assets this company holds are the safest around with mostly AAA rated renters. They rent triple net which means the renter pays any increases in taxes and upkeep.  Most rents have a built in increase year after year.  They have increased their dividend annually for some two decades.  Take a look at the stock chart and you will see even during the financial meltdown NNN barely moved down. 

O...Realty Income is almost a clone of NNN.  Stock price bounces between $40 and $45. Same triple net approach. Same rental increases.  Same increases in dividend on a regular basis for about two decades.  Payout now is just over 5% and it is paid monthly not quarterly.  Only difference with NNN is that Realty Income has a little more diversified rental base and some less rated renters.  But in the end I could buy this stock for my grandmother and never lose a moment's sleep. 

T..AT&T is the second largest telecom company in the US with a stranglehold on the business with the largest telecom in the US Verizon.  We remain convinced that young people in this country would give up food to keep their cellphones and that makes for a solid safe stock.  Almost a 5.25% dividend that increases every year with a stock price that stays around $34.  

VZ...Verizon is the largest telecom company in the US and just like AT&T it is safe, safe, safe.  Stock price around $50 and a 4.25% dividend that increases year after year. 

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