What to do with $83,000 in this market

Dear Mr. Berko: The stock market has recovered tremendously, but we think it will crash again. We have $83,000 to invest for growth and income. We are very nervous but desperately need more income. Two stockbrokers recommend index annuities, and a third recommended six stocks (each enclosed), but if we believe that the market is going to crash again, what should we do? Please advise us.
— SS, Jonesboro, Ark.

Dear SS: Some brokers who think the Dow Jones industrial average will crash pass on fear to investors so they can sell high-commission annuities. Smart brokers consider a market crash to be a buying opportunity, knowing that if the Dow tanks, a Golconda of bargains will abound. And they’ll suggest good-till-canceled orders at prices far below current market prices. A GTC order remains, well, good till you cancel it. For example, a GTC order to buy a stock at $19 while it trades at $25 will be executed only when that stock falls to $19. If you think the market will crash, consider trolling with GTC orders well below current prices; you might hook some beautiful yields. Consider GTC orders on the six stocks recommended by broker No. 3. This is called trolling for treasure.

Seagate Technology (STX-$33.70) is the world’s largest manufacturer of hard drives, and it also provides data storage services for small to medium-sized businesses. The $2.52 dividend, yielding 7.3 percent, may be raised to $2.71 this year. Place a GTC order at $27. If the order were to be executed later on a market dip, the dividend would yield 10 percent. The median target reported by Thomson First Call is $35.

Verizon Communications (VZ-$53.10) is a $139 billion-revenue information and entertainment products company. The $2.26 dividend yields 4.2 percent and may be raised to $2.32 this year. Place a GTC order to buy VZ at $38. With the increased dividend, VZ would yield 6.1 percent. The median target price by Thomson First Call is $51.

Philip Morris International (PM-$97.97) sells $78 billion worth of tobacco products — e.g., Marlboro and Chesterfield — and has a swell history of dividend growth. The $4.08 dividend yields 4.2 percent. Place a GTC order for PM at $75. With an increased 2016 dividend of $4.55, PM would yield 6.1 percent. Thomson First Call has a lower median target price of $92.

GlaxoSmithKline (GSK-$39.63), a $37 billion-revenue pharmaceutical company, also sells Tums, Polident and NicoDerm CQ. Competition from generics has inhibited growth, but management expects a turnaround this year. The $2.68 dividend yields 6.7 percent. Place a GTC order to buy GSK at $35. If executed, the dividend would yield 7.6 percent. The dividend was raised in February. Thomson First Call suggests a median target of $48.

AT&T (T-$39.14) is a $140 billion telecommunications giant that also owns DirecTV. T has a long record of small dividend increases, and the current $1.92 yields 4.9 percent. Place a GTC order to buy T at $30. If executed, the dividend would yield 6.4 percent. Most brokerages have a “buy” recommendation on T.

HCP Inc. (HCP-$32.18) is a $2.5 billion-revenue real estate investment trust investing in properties that serve the health care industry. For over 25 years, it has grown revenues and annually increased dividends. The current $2.30 yields 7.3 percent, and this year, HCP expects to pay $2.38. Place a GTC order to buy HCP at $25 and the yield would be 9.5 percent. Thomson First Call shows a median target price of $31.

Enterprise Products Partners (EPD-$24.36) came public in 1968 and dwarfs its competitors. EPD may be the largest and most diversified master limited partnership in the nation and is one of the few without a general partner. With nearly 50,000 miles of pipeline and enormous storage capacity, EPD has weathered this oil crisis with aplomb. The $1.56 dividend yields 6.4 percent and may be raised to $1.61 this year. If you were to buy EPD at $19 with a GTC order, it would yield 8.4 percent. Thomson First Call reports a median price of $32.

Or you can pick 20 or so stocks that have good potential. Observe the 12-month trading range and bait your hook with a GTC order on each issue using its lowest 12-month price. Then cast 20 lines, sit back and begin trolling for treasure.

—————

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 2016 CREATORS.COM