Adviser Babin says to look hard at companies' dividend growth

The Ticker

October 22, 1997|By Julius Westheimer

ARE YOU looking for a good investment? "Stocks with strong dividend growth outperform other stocks," says adviser Charles Babin. He explains, "Companies raise dividends when the future looks bright, but cut payouts when they expect rough times. Best strategy is to focus on dividend growth, not yield."

Companies that boosted at least 10 percent a year over 10 years include Merck, Johnson & Johnson and Travelers Group.

PLAY BALL! Where do you think the Dow Jones industrial average stood when the Orioles last won the World Series on Oct. 14, 1983? Read on.

CANDLES & CAKE: More financial milestones:

Age 55: First time you can take penalty-free withdrawals from company retirement plans.

Age 59 1/2 : Now you can take withdrawals from any retirement plan or IRA without the 10 percent penalty on early redemptions or money not rolled into another retirement account.

Age 62: You may now collect Social Security benefits, though you may not want to. Benefits paid at 62 are reduced up to 20 percent from what you would receive at retirement age. Have an accountant run the numbers with you.

Age 70 1/2 : You must begin taking minimum withdrawals from retirement plans and IRAs. The exceptions are if you are still working or own over 5 percent of the company you work for.

HOME RUN: On Oct. 14, 1983, when the Orioles won the World Series, the Dow Jones average closed at 1,268.52. This morning, the Dow stands at 8,060.44.

GRINNING PUMPKIN: "Use the 'Halloween strategy.' History shows 80 percent of gains in an average year occur between October and May. So be in the Dow 10 -- the 10 highest-yielding Dow Jones stocks -- between Nov. 1 and April 30, and in a money fund the other six months. This could give you 80 percent of the gain but your money is at risk only 50 percent of the year." (Beating the Dow newsletter)

QUICKIES: "Putting together a diversified portfolio by spreading your savings around, you ensure that no single investment choice can ruin you if it goes awry." (Smart Money, Nov.)

"Thousands of Keogh plans risk being disqualified on audit because the plans have not been kept up to date. Plans must be amended whenever the laws change." (Tax Hotline, Nov.)

"Today's market plunge was because of fears about a strong economy." (CNBC-TV) My question: Don't we want a strong economy in the long run?"

"Reason we've outperformed is because we went in when days were darkest and blood was running in the streets." (Mark Mobius, manager, Templeton Developing Market Trust)

Pub Date: 10/22/97

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