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Highly Rated Stocks

Dear Mr. Berko: I am very nervous about the stock market and have been selling my weak stocks — those that have weak financial statements and those I don’t think will be able to keep their profit momentum during a big downturn. For example, I’m selling Ford and General Motors, my airline stocks, some of my real estate investment trusts, two restaurant stocks, all of my small telecommunications stocks, two media stocks, insurance stocks, bank stocks, and mortgage issues. But I want to remain in the market with stocks rated A++, because they have the highest financial strength and, though they may also fall in price, they will continue their dividends and recover well when the market comes back. What stocks would you recommend? I have $84,000 to invest. — HK, Kankakee, Ill.

Dear HK: The designation A++, for the few who don’t know, is Value Line’s top safety rating. It tells us that the financial strength of a company is among the best of the 1,700 companies followed by Value Line. Value Line’s ratings are measured by companies’ balance sheets and financial ratios and by the stability of their stock prices over the past five years. Value Line also considers business risk, the level and direction of profits, cash flow, earned returns, cash on hand, and the size of a company. But be mindful that the Value Line safety rating is a quality rank and not a performance rank. Please read that sentence again.

Less than 5 percent of Value Line stocks have the highest rating. Here are eight stocks that are rated A++ by Value Line, each yielding 3 percent or higher and having a long-term history of increasing dividends.

Everyone knows IBM (IBM-$164) as a worldwide supplier of technology, business services and software systems. IBM pays a $6 dividend and yields 3.6 percent. A dozen years ago, IBM was $80, and the dividend was 78 cents. Wall Streets is bullish on IBM’s earnings and dividends for the coming years.

Qualcomm (QCOM-$68) designs and markets integrated circuits used in voice and data communications, and the dividend, which is now $2.28 and yields 3.55 percent, has increased from 9 cents in 2003, when the stock was trading in the high $20s. QCOM’s merger talks with Broadcom are contentious, and some think it won’t happen. If it doesn’t, the Street thinks good things are in store for QCOM in 2018.

AT&T (T-$36.50) provides communication, entertainment and internet services to businesses around the world. The $2 dividend yields 5.3 percent and has increased each year since the Lord’s dog was a puppy. Both revenues and earnings should increase in 2018.

Pfizer (PFE-$36.40) sells drugs, lots of drugs. In fact, PFE sold $53 billion worth of drugs in 2017. Drugs such as Prevnar 13, Enbrel, Lyrica and Lipitor have enabled PFE to raise its earnings yearly and have enough money to spend hundreds of millions on TV advertising. The current $1.36 dividend yields 3.7 percent and should be increased in 2018.

Paychex (PAYX-$67) is a national provider of affordable full-service payroll services, as well as human resources services. PAYX’s $2 dividend yields 3 percent. Net profit margins are 26 percent, and return on equity is 43 percent. Expect continued earnings and dividend growth.

Merck & Co. (MRK-$62.52) is a $40 billion drug company that has an impressively fecund drug pipeline, which will stand it in good stead over the coming dozen years. MRK’s $1.92 dividend yields 3.4 percent, and profits and dividends should increase in 2018.

Coca-Cola (KO-$46) is a household name, Warren Buffett’s favorite drink and among his favorite stocks. His holding company, Berkshire Hathaway, has owned the stock for over 35 years. The $1.48 dividend yields 3.2 percent and should be raised again this year.

Procter & Gamble (PG-$90) sells a huge range of consumer products, from baby care to health care to beauty care. The $2.76 dividend yields 3 percent. The Street expects excellent growth this year and in 2019.

Invest $10,000 in each of those stocks, which will produce a 3.3 percent current return. Let’s hope that will give you the protection you want and a handsome yield in this market.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

 

COPYRIGHT 2018 CREATORS.COM

 

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Drew Limsky

Drew Limsky

Editor-in-Chief

BIOGRAPHY

Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.