Young's Mantra: "Yield"

09/23/2005 12:00 am EST


Richard Young

Editor, Young's Intelligence Report

"Buy high yields, sell low yields’ should be your mantra for investing today," says Richard Young. "Yield is no longer the icing. It is the cake." Here’s a look at the types of stocks that meet his long-term safety and value criteria.

"Katrina will act as a catalyst to a series of events, both big and small, many unforeseen and unpredictable today. However, our investment strategy need not be altered, as we focus on a fully counter-balanced portfolio capable of riding out even catastrophic events like Katrina. Cash, especially in the form of dividends, is king in uncertain times.

"Fording Canadian Coal Trust (FDG NYSE) yields 7%. It’s a great way to play the long-term demand for coal. Natural Resource Partners (NRP NYSE) will benefit from the strong global demand for coal. NRP’s long-life, diverse portfolio provides stable royalty-based cash flow. NRP is the sixth-largest US owner of coal reserves. With its high yield, NRP is ideal for income seekers. Piedmont Natural Gas (PNY NYSE), yielding 3.7%, is ideal for the conservative yield-oriented investor. This stable bastion of natural gas home delivery has provided you with a 60-month 16% average annual total return. Plus, in February, the board increased the dividend for the 27th consecutive year. Continue to add Piedmont. ExxonMobil (XOM NYSE) is simply the #1 energy company in the world. If you don’t own it, you should.

"Rayonier (RYN NYSE) and Plum Creek (PCL NYSE) are my two favored timber resource diversifiers. These nice-yielding counter-balancers belong in all portfolios. BHP Billiton (BHP NYSE) is the world’s largest diversified resource group. Its balanced resources strategy is suitable for both weak and strong markets. I’d like to see a much bigger dividend and a gangbusters share repurchase program. In the interim, the shares are a foundation piece of well-diversified retirement portfolios. Rio Tinto (RTP NYSE) is a worldwide leader in mining and processing the earth’s minerals. It’s a conservative slow-and-steady company. This is an absolute core natural resource holding for conservative investors.

"Caterpillar (CAT NYSE) should be one of your core long-term assets. Who could be better positioned than the world’s #1 company in mining and construction equipment, diesel and natural gas engines, and industrial gas turbines? Illinois Tool Works (ITW NYSE) is a diverse collection of 650 worldwide companies. The firm is a little like a worldwide mini GDP. This is a well-managed company and a great core holding. PepsiCo (PEP NYSE) has 16 brands that each generates over a billion dollars of sales annually. All in all, it would be hard to find a more solid core holding for your portfolio. Coca-Cola (KO NYSE), in 2004, raised its dividend by 14%—the 43rd consecutive year of increased dividends. In 2004, KO also repurchased $1.7 billion of stock. Buy KO in all retirement portfolios."

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