Market Got You Worried? Some Suggestions

The Ticker

April 23, 1997|By Julius Westheimer

DESPITE yesterday's 173-point Dow Jones rally -- added to last week's record 312-point surge -- do forecasts like these frighten you?

"A serious decline lies ahead, with a true bear market in the fourth quarter." (Eakle Report.)

"Stocks are so critically overvalued that we face a dangerous 40-50 percent plunge." (Sy Harding's Hotline.)

If doomsday predictions keep you awake, why not forget appreciation for awhile and invest for income?

Even oil tycoon John D. Rockefeller said, "I love slitting envelopes with my dividend checks inside."

For regular dividend checks with possible growth, some suggestions:

Baltimore Gas and Electric appears under "Attractive High-Yielding Stocks" in S&P Outlook, April 16. The local utility yields 6.2 percent, double today's inflation rate. BGE raised its dividend nine times in the last 10 years.

If you bought BGE in 1987 at a split-adjusted $12 a share, you would now receive 13.3 percent income on your investment -- and rising each year -- plus having doubled your money.

Potomac Electric Power, slated to merge with BGE, yields 7.5 percent. Pepco hiked its payout eight times in the last decade.

Both issues appear in this week's (April 21) Barron's "12-Month New Lows" listings. You can often make more money buying "new low" stocks than by chasing low-dividend high-fliers.

Other income stocks, with percentage yields in parentheses, include AT&T (3.9), Bell Atlantic (5.0), Duke Power (4.9), Exxon (3.0), Dominion Resources (7.4) and Texaco (3.3). If those yields appear unappetizing, note that today's average stock returns only 1.9 percent, a record low.

Another income idea: Smart Money, April, says, "REITs [real estate investment trusts] that pay 6-7 percent dividends are a `sweet spot' for investors, with a solid stockholder payout. Low vacancy rates, little new construction and higher rents are good news for REITs. [Washington REIT yields 6.0 percent.]"

Rather have bonds for income? Forbes, April 21, says, "If the stock market spooks you, park your money in two-year Treasury notes. Yielding about 6.4 percent, they will look very attractive if stocks dive again."

Regarding the above, the Treasury yesterday issued new two-year notes, and today brings five-year notes.

A word of caution about "income" investing: Don't assume that you will need the same income in retirement as you receive now. If you have a $40,000 income today, with inflation at 4 percent, you'll need more than $100,000 a year 25 years from now to enjoy your same living standard.

INCOME ITEMS: "From your dividends, put away a certain amount each month. Habitual saving makes you careful." (Dollars and Sense, 1920.)

"I'm more interested in the return of my money than the return on my money." (Will Rogers.)

Pub Date: 4/23/97

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