Make Retirement Portfolio Rebalancing A Holiday Event

Includes: GE, JNJ, T, XOM
by: Regarded Solutions

That time of year is fast approaching and many of us will take steps in reviewing our portfolios - for tax purposes, for investment purposes, and rebalancing purposes just to name a few.

It is especially important for those of us who are retired or near retirement to examine our investments and make sure we are on the right track for our short term as well as longer term goals, not to mention attempt to make 2012 an even better year than 2011.

We owe that to ourselves, and we should do whatever we can to make it happen.

That being said, now is an opportune time to take some specific actions:

Stocks to Buy Now, or Add to Existing Positions:

1) Exxon Mobile (NYSE:XOM) : Price as of 11/17-$77.86/share, 2.38% Dividend Yield, ESS Rating: Bullish

With the turmoil in the world, including the Middle East as usual, one thing remains constant: our reliance on oil to fuel our entire lives. With the added rumblings surrounding Iran, oil prices could see some significant spikes in 2012. We might even see a return to inflation, and a stronger economy. All of this leads to higher profits for the big oil companies. Exxon Mobile is the biggest, and right now is not expensive. Now could be a good time to buy or add to positions.

2) Johnson and Johnson (NYSE:JNJ) : Price as of 11/17-$63.94/share, 3.51% Dividend Yield, ESS Rating: Bullish

A stronger pipeline of products and drugs than we have seen for quite some time, resolution of some recent issues that have impacted the share price (such as the baby products issue) and a share price that is extremely attractive by any fundamental measure, this steady, dividend-paying blue chip is well positioned for solid growth. I believe it should be purchased at these levels whether you're first time investor or adding more shares to an existing position.

3) General Electric (NYSE:GE) : Price as of 11/17-$15.64/share, 3.70% Dividend Yield, ESS Rating: Neutral

Its balance sheet, cash and PE of 13.07 should be enough, but it never seems to be, and at some point those basic fundamentals will kick in. General Electric has consistently underperformed and has not lived up to its expectations for a very long time. At its current price, in my opinion, it is undervalued. This Dow component has all the tools to grow significantly and its share price, as well as its dividend, could see significant appreciation. I would add to, or begin a position at these prices.

4) AT&T (NYSE:T) : Price as of 11/17-$28.61/share, 5.98% Dividend Yield, ESS Rating: Very Bullish

Ok, where do I start? Dividend yield? Undervalued share price trading near its 52 week low? Its low PE of 14.68? I know I left out a few things perhaps, but it is my personal opinion that AT&T could be the star of your portfolio in 2012. Great company with great products, a great dividend, and a low price to jump on, in my opinion. Now is the time.

Where Do We Get the Money From?

Obviously, we need to be in a position to buy these shares and I have seen large cash positions that have either remained on the sidelines or are still invested in fixed income products. Now might be the time to re-think your mix, or, your reluctance to take on some risks with blue chip dividend paying stocks. Here is an overview on how that can be funded:

  1. Use some cash reserves.
  2. Use the cash you've earned from the dividends of these very stocks if you have not already had them re-invested.
  3. All that cash from the covered call strategy that we have discussed previously ( hopefully you have tried some, or hopefully you have done a lot of it).
  4. Sell those losers in your portfolio that do not have as good an opportunity to grow…it only hurts for a second, and remember, if you have made money trading during the year, losses can offset your gains up to 100%, and if not, you can still deduct up to $3,000 (without even itemizing) from your other taxable income. Plus, the balance of any loss can be rolled over, forever, or until you have used it up to offset future capital gains. It is a very important feature to use.

My Opinion

I have previously written about these stocks, and how they can give any portfolio a well balanced, diversified, dividend paying core, especially for a safer and more secure retirement. Now is the time of year we should do a few things. Change the batteries in your smoke detectors, and re-evaluate your portfolio.

Disclosure: I am long XOM, JNJ, GE, T.