Lower portfolio volatility and triple your income

BY CHRIS HANLY

Investment Consultant, Gary Goldberg Financial Services

2014 kicked off just as our Investment Committee members forecast – with a rise in market volatility. Looking ahead this first quarter and for the rest of the year, we expect overall market volatility to keep climbing, meaning many investors will need to rethink their investment strategy. One way to reduce portfolio volatility, while at the same time doubling your income, is to invest in high quality dividend paying stocks. Specifically, you should target companies that have a history of raising their dividends.

Doubling your income is hard work. For instance, data from the Social Security Administration’s national average wage index shows that over the last 10 years, wages have grown at a “slow as cold tar” compound annual growth rate of 2.70%. If your wages are growing at this rate it will take you 26 years to double them.

In our proprietary Dividend Buster program we’ve identified 15 stocks that we believe will continue to raise their dividends, have significant capital appreciation potential, and have historically been less volatile than the overall market. The current Yield of the portfolio is just over 4.5%.

Some of our current and past holdings, which have more than doubled their dividend in the past decade, are below:

I’m not recommending investors rush out and invest in these companies; our team of analysts and the Investment Committee do an enormous amount of research to determine the suitability of the investments and whether they are still timely.

One other stock that should be on the list is Altria Group, or MO. If you owned the stock in 2002 and you still hold it, you’ve done very well in income as well as capital appreciation. With respect to income, when the spinoff of Philip Morris International was completed in March of 2008, MO shareholders received one share of PM. In 2002, MO was paying a dividend of $2.44 annually. Today the two companies combined are paying $5.88; more than double.

Christopher Hanly is an investment consultant with Gary Goldberg Financial Services in Suffern and can be reached at (845) 368-2900 ext. 247 or chris.hanly@garygoldberg.com.