Please note, the following is not a recommendation. I can not and will not recommend specific stocks for accounts since I do not know your particular position and am not a financial advisor.
In recent posts I’ve been talking about how to invest once one has built up a portfolio and would like to live off of income from the account. As stated, the goal at this point in one’s life is to buy well established stocks that are late in their life cycles such that they are paying most of their money in dividends to the shareholders. Some small amount of growth is good, since it will help the account keep up with inflation, but small growth companies should not make up a large portion of such a portfolio.
An example of the type of stock for which one should look is BCE Inc. (symbol BCE on the NYSE). The aspects of this stock that make it appropriate are:
1) A good dividend – the stock is currently yielding about 5.2%.
2) A mature company – this is a large company in the Canadian telecommunications field. They already have sound cash flows and a reliable income stream.
3) Low beta – the company has a beta of 0.75. (Beta is a measure of how volatile a company is. A beta of 1.00 means that a company fluctuates as much as the market. Lower betas indicate less volatile stocks.
4. Some growth potential. While this is not a Google, there is room for the company to expand and grow. The telecom field also has room for growth over the next several years as everything goes from wired internet to wireless internet.
5. A growing dividend. The company is making more income each year and paying that additional income out in dividends. This will allow the income stream to increase, offsetting the effects of inflation for the stock holder.
This may not be the company for everyone, but this type of company is what individuals who are looking to live off of their accounts should include as part of their portfolios.
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Disclaimer: This blog is not meant to give financial planning advice, it gives information on a specific investment strategy and picking stocks. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.