Widow-and-orphan stocks making more cents now
By Dian Vujovich
Once upon a time widow-and-orphan stocks were typically gas, electric and phone company stocks. Today these stocks—thought of as less volatile than most and providing an income stream to boot—come from a variety of different companies. Many, in fact, have yields beating those on Treasury securities. Hence, the widow-and-orphan label.
Because widow-and-orphan stocks (WAOS) historically have had a tendency to be considered boring, overlooked during bull markets and often forgotten during bearish days, in these times of market volatility and uncertainty now might be the perfect time to look at them. Being a widow or an orphan isn’t a necessity here. Looking for what’s considered a conservative investment in a good solid company with a history of paying dividends consistency however, is.
Before naming some companies ferreted out in a recent Wall Street Journal story as blue chip suggestions for widow-and-orphan stocks, let’s do some comparisons: Treasury yields are at historic lows with the 10-year bond under 3 percent and yields on CDs and savings accounts beyond puny.
According to a piece written by Brett Arends, titled “Looking for a Yield Boost? “her research revealed 50 companies whose yields were higher than that of the 5-year Treasury bond (it yields about 1.7 percent) and screened out stocks with p/e ratios greater than 15, debt levels equal to or higher than half their assets and earnings (before interest and taxes) less than three times annual expenses.
As you might guess, the names of the companies bubbling up are familiar ones but as with all stock purchases don’t come with guarantees on either the movement on their stock prices or dividend payouts. Nonetheless, these companies are worth a look see provided you thoroughly understand the investment risks involved.
Two examples with 4 percent yields in the consumer staples department include Kraft Foods (KFT) and H.J. Heinz (HNZ). General Mills (GIS) and Kellogg (K) and Campbell Soup (CPB) all yield around 3%. As for utilities, Consolidated Edison’s (ED) yield is 5.2%, American Electric Power Co. (AEP) 4.6% and PG&E Corp. (PCG ) 4.1%.
Check out others at : http://tinyurl.com/23sne75 .
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