2010 Sep 17 - Fri
Percentage of Portfolio in Fixed Income
Here's a handy way to think about it: Keep your age in fixed income. If you're 65 years old, at least 65% of your portfolio ought to be in fixed income.
Keeping money in mutual funds over the last few years has probably been a bad idea for individuals reaching retirement.
The better bet is to find income generating securities, for instance, stocks paying dividends. Even though the market value
may decrease, income is still derived from dividents payed by the company.
Another example might be short-duration, corporate bonds that are trading at a discount to par.
The iShares Corporate Bond Fund (HYG) yields about 9% for people who don't want to hold individual bonds.
There are some risks to corporate bonds, but provide one of the few good ways to get a reasonable amount of income.
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2010 May 26 - Wed
Value Investing
When it comes time start living off dividends, it will be good to have some good value equities in the
portfolio. These equities generate good dividends year and year out.
Good candidates for these types of equities are companies which are what one writer calls
'World Dominators'. These are companies which dominate their industries globally, each is
Number One in its industry. They earn consistent high returns on their capital, and generate
excellent cash flows year after year, through thick and thin. It is said there is one company which
has raised its dividend every year for 54 years, another every year for 36 years.
With the market reaching a low, it might be good to pick up some of these companies. Some
are indicated to be trading at less than 10 times free cash flow.
I think I'll generate a query through my DTN IQ live feed and look at the dividend fields and income fields
to see what I can see.
As one example, one writer is suggesting NLY as a buy. It's chart may be reaching a bottom. I don't know if
it satisfy the other criteria mentioned above, but I'm recording for posterity. It's close today is $16.40.
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