Dividend Income Portfolio With Price Appreciation Potential

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Includes: ATVI, KKR, KMP, NLY, NTR, PM, VZ, WPZ
by: Nick Pollari

Our view for the beginning half of 2012 remains a cautious one despite the “backdoor QE” that is being experienced in Europe at the moment. We find that most of our large institutions and big money clients are looking more toward capital preservation rather than long-term investing. The first 6 months of the year will continue along this path of “risk on” and “risk off” coupled with extremes in volatility. The US debt issue remains a key concern despite the lack of attention it has been getting, Europe remains a black hole (nothing to help resolve solvency has been addressed), and key companies that we use to judge market conditions have reduced guidance and lack clarity on the future.

Some of our more cautious clients have been continuing to focus on a dividend portfolio with a light composition of some capital appreciation companies. We have developed this portfolio for a client trust and it is to comprise approximately 60% of the overall trust. This portfolio is designed to have a solid dividend distribution of 5.5% with the potential upside of price appreciation. The income derived by this portfolio is to be set aside for future investment and not reinvested directly into these securities.

As some of you may have noticed we have removed one of our favorite stocks (NYB) from this portfolio. This is done merely due to the desire for limited financial sector exposure per our clients’ request. KKR has been substituted instead as our client feels more comfortable holding KKR as opposed to NYB.

Ticker

Company

Price

Div

Yield

% of Portfolio

BKH

Black Hills Corp

$ 33.00

$ 1.46

4.42%

10%

WPZ

Williams Partners

$ 59.00

$ 2.99

5.07%

10%

PM

Philip Morris

$ 78.00

$ 3.08

3.95%

15%

ATVI

Activision Blizzard

$ 11.75

$ 0.17

1.40%

10%

KKR

KKR & Co

$ 12.25

$ 0.71

5.80%

7.5%

OTCPK:MFST

Microsoft

$ 25.50

$ 0.80

3.14%

7.5%

KMP

Kinder Morgan

$ 81.50

$ 4.64

5.69%

10%

NLY

Annaly Capital

$ 16.75

$ 2.28

13.61%

15%

VZ

Verizon

$ 39.00

$ 2.00

5.13%

10%

POT

Potash

$ 40.00

$ 0.28

0.70%

5%

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.