Barron’s article by Michael Santoli, this weekend further, supports our thesis that cash rich, dividend paying stocks should be the investment of choice for baby boomers and any individual who wants to achieve positive long term equity returns with low volatility. The article states that “corporate America is prepared to return cash to investors and to accelerate the spending, hiring, investing and acquiring that most companies curtailed stress and deep uncertainty of the financial crisis and the 2007-2009 economic contraction.” On the list of returning cash to investors is dividend increases. The article also mentions two of our favorite stocks, Intel (INTC) and International Business Machine (IBM). Our screens (CAIM LLC) have produced stocks with an average cash flow per share of $4.89, 30% debt and a dividend payout of 42%.
High quality U.S. companies are ready to come out of safety mode and regroup for growth. We are urging baby boomers to take advantage of this trend while these companies are attractively valued. These companies will be the life blood of boomer’s portfolios as they will need to out pace inflation and receive a stream of income from their investments.