Sunday, August 10, 2014

" One of the miracles of the investment firm Goldman Sachs is how they always minimize their risk by balancing with hedging positions. If you are a growth stock investor, the way you need to hedge is to barbell your portfolio with some solid dividend stocks."

Dow Jones Industrial Average 16,554 (UP) Week ending of 08-08-2014

In the great real estate and investment crash of 2007, with its lovely derivative CDOs and CDO Squared bundled mortgage packages, one firm that realized the great investment risk and hedged their positions was Goldman Sachs. Some folks were mad at Goldman because these positions were opposite of the CDO products that were being sold to customers. Their "mark to market" accounting warned them to beware and hedge.

Lloyd Blankfein , CEO Goldman Sachs
You, like Goldman Sachs, need to be constantly assessing the risk in your portfolio positions if you are a growth stock investor. To keep long in your good growth positions, which will naturally have some market swings, you should balance out your portfolio with some good solid dividend stocks that may have an added growth kicker. This will lower the volatility in your portfolio and it will let you sleep a little better at night during big market swings.

Here are a few stocks that I have found useful for that purpose.

T. Boone Pickens
The first one is from the great US energy advocate, T. Boone Pickens and it is Mesa Royalty Trust (Symbol MTR, $26.94).

I have seen dividend percentages paid for the company on different websites of anywhere from 9.79% to 13%. It think the actual number is 11.31%, but at any rate, at least 10%.  MTR has a profit margin of 96% and a Return on Equity of 74.99.  The current PE on the stock is 13.7. The stock was as high as $37.60 back in June 2014, so you are getting a pretty good deal at the current price.  This is an MLP, so there are some tax considerations with this one.

 The next stock with the nice dividend would be Blackstone Group L.P. (Symbol BX, $32.98). This one is captained by another brilliant man, and a local Abington PA. product, Stephen A. Schwarzman.

Stephen A. Schwarzman
Blackstone pays out a nice 6.79% dividend. Blackstone Group has had an excellent year with the selling of some of its Hilton Worldwide Group holdings.

"Blackstone Group LP is a global manager of private capital and provides financial advisory services. Its alternative asset management businesses include the management of corporate private equity funds, real estate funds, funds of hedge funds, credit-oriented funds, collateralized loan obligation vehicles and separately managed accounts. Blackstone also provides a wide range of financial advisory services, including financial advisory, restructuring and reorganization and fund placement services. The company operates its business through five segments: Private Equity, Real Estate, Hedge Fund Solutions, Credit Businesses and Financial Advisory." 

Here are a few other names that could come in handy:

Richard K. Davis

U.S. Bancorp (Symbol USB, $41.18) is a company of which Berkshire Hathaway and Warren Buffett, (and Charlie Monger, don't forget Charlie!), own a bunch of shares.  It pays a 2.3% dividend and has a PE of 13.55. USB is a Super Regional bank holding company based in Minneapolis, Minnesota. Return on Equity of 15.99% and they produce quarterly Free cash flow of $1.1 Billion dollars per quarter. No worries here! This tight ship is run by Richard K. Davis. 

The last one is Amgen (Symbol AMGN, $126.95) which had just run up recently on excellent quarterly results. AMGN  is an American multinational biopharmaceutical company headquartered in Thousand Oaks, CA. The company pays a 1.92% dividend and gives you a nice growth kicker to go along with the dividend. The company is projected to earn $8.98 per share next year. This one is run by Robert A. Bradway. 
Robert A. Bradway or "Bob"

If any of these stocks are added to your IRA, they will give balance to all of those growth stocks you have that have little or no dividend, because they are rapidly reinvesting money back into the growth of their business. There are many others, but here's a warning: do not buy any that cannot sustain their dividend.

Finally, NFL Football is started up here back in the USA. Time for my other stats to keep, Fantasy Football. A great education in picking out performing assets.



No comments:

Post a Comment