A Personal Note
It is hard to believe that we are quickly approaching the holiday season! Turbulent markets and turbulent weather have made it easy to be distracted from the passage of time.For those who do not like to shop in stores, or who want to give a gift that keeps on giving, CAIM has just released its list of holiday gift stocks. At a time when interest reates are at such low levels, it makes sense to give stocks that are yielding above the 5 year treasury (0.89%), instead of putting cash in a savings account.Wishing you and yours a very Happy and Healthy Thanksgiving!
Catherine Maniscalco Avery
CAIM specializes in creating and managing
customized and fully diversified investment
portfolios for private investors.
HOLIDAY STOCKS 2011
One of the best gifts we can give our children is the gift of financial independence. A good way to start is by giving them stocks as holiday gifts.Buying stocks for the young people in your life, whether kids and grandkids or nieces and nephews, is a compelling option on several levels. First and foremost, it provides an opportunity to teach them about money practicalities. Sit down with them at the end of year, go over their own portfolio and note the changes. They might not get it at first, but if you repeat this scenario over 5, 7 or 10 years, they will begin to understand.Stock gifting also introduces kids to investing in companies they can relate to. If you can also talk to them about their investments throughout the year it will help reinforce the idea of why they have a vested interest in a particular company. It will also keep them involved in saving.2011 is a perfect year for stock gifting. Many quality companies are paying dividend yields far greater than those in an ordinary savings account or money market fund. Instead of handing your child a check and telling them to deposit it in the bank, buy them some stock, or consider gifting some stock from your own portfolio.At CAIM we believe there are 3 key elements to selecting stocks as investments for children.
1. Choose a company that has products or services your recipient can relate to. For example, Proctor and Gamble (PG) sells lots of every day household items, from toothpaste to batteries.
2. The company should have a history of paying dividends. Dividends should be reinvested as they are paid to buy more shares. Many of the companies we recommend have a history of increasing their dividend exponentially, allowing the investor to buy more shares. This compounding effect can have a tremendous impact on the total investment return over time.
3. Buy companies that are attractively priced based upon the company’s fundamentals. We favor companies with low levels of debt and high levels of cash flow. These companies are better poised to withstand market downturns and have the financial flexibility to grow their business and their dividends.
CAIM’s Holiday List 2011:1. McDonald’s Corp (MCD, $93.81, 3.0% dividend yield). The company has 43% in debt to total capital and $6.38 in cash flow per a share. They have increased the dividend for the past 24 years. In addition to strong fundamentals, McDonalds has also proven they listen to shareholders. As the country moves towards healthier eating trends, MCD is now including produce or a low fat dairy in every happy meal. By 2020, MCD will reduce added sugars, saturated fat and calories through varied portion sizes, reformulations and innovations.2. Johnson and Johnson(JNJ, $64.38, 3.5% dividend yield). 49 years of consecutive dividend increase and a dividend yield above the 10-year treasury make this company a compelling long-term investment. JNJ has very low debt at 18% to total capital and cash flow per share of $6.00. Company products range from baby shampoo and band aids to sophisticated drugs and medical products.3. Emerson Electric (EMR, $51.13, 3.1% dividend yield). This company is a dividend powerhouse. 55 years of consecutive dividend increases even in the most challenging economic climates. With 29% debt to total capital and $4.40 in cash flow per share, they increased their dividend by 16% this year. Emerson may not be an obvious choice when it comes to recognizable products, but this global industrial company makes products for both residential and commercial use. For example, they manufacture motors for washing machines as well as solutions for heating and air conditioning in home and commercial properties. For more information about their products, go to www.gotoemerson.com.Many of these companies offer dividend reinvestment plans (otherwise known as DRIPs) to buy the share directly through the company. Charles Schwab and Company will open up a custodial account with as little as $100. Please call with any questions about how to set up a plan or how to choose companies that are right for your child.
Enjoy the holiday season!Take a look at last year’s picks from CAIM:1. Proctor and Gamble (PG, $62.13, 3.1% dividend yield).2. United Technologies (UTX, $74.80, 2.3% dividend yield).
3. International Business Machine (IBM, $142.89, 1.8% dividend yields).Copyright 2011, CAIM LLCDisclaimer: NO CONTENT PUBLISHED AS PART OF THE CAIM LLC NEWSLETTER CONSTITUTES A RECOMMENDATION THAT ANY PARTICULAR INVESTMENT, SECURITY, PORTFOLIO OF SECURITIES, TRANSACTION OR INVESTMENT STRATEGY IS SUITABLE FOR ANY SPECIFIC PERSON. TO THE EXTENT ANY OF THE CONTENT PUBLISHED AS PART OF THE BLOG MAY BE DEEMED TO BE INVESTMENT ADVICE, SUCH INFORMATION IS IMPERSONAL AND MAY NOT NECESSARILY MEET THE OBJECTIVES OR NEEDS OF ANY SPECIFIC INDIVIDUAL OR ACCOUNT, OR BE SUITABLE ADVICE FOR ANY PARTICULAR READER. EACH READER AGREES AND ACKNOWLEDGES THAT ANY SPECIFIC ADVICE OR INVESTMENT DISCUSSED IN THE BLOG MUST BE INDEPENDENTLY EVALUATED BY THE READER AND HIS OR HER ADVISER IN VIEW OF THE READER’S INVESTMENT NEEDS AND OBJECTIVES.