Portfolio management and choosing the right stocks in the right stock climate is a difficult task. A good starting point is to know how much time you have before you need to sell the stocks, as well as how much risk or volatility that you’re willing to take. Volatility, as in the definition, is a statistical measure of the dispersion of returns for a given secure or index. If you are risk-averse, you normally tend to hold stocks with lower volatility and therefor with a beta value lower than 1.
Some blue chips securities provide investors with low volatility and a high yield, but with low growth. We can find many of those securities in the utility sector.
A popular security it many portfolios were the aim is to achieve a high yield is AT&T (NYSE:T) which belongs to the utility sector. AT&T is a leading provider of telecommunication services in the United States and the world, and the modern version of AT&T has operated since 2005 when they merged with SBC Communications. The company provides shareholder with a at 5.34% and a beta at 0.44. Earnings per growth is expected to be around 2%, so this is not a growth stock at all, but a good alternative to owning bonds.
Southern Company (NYSE:SO) is another utility which operates within the electric power segment. The company supply electric service in the states of Alabama, Georgia, Florida and Mississippi. Southern Company yields 5.20% and has a beta at 0.14. While the beta is very low, investors should know that utilities are exposed to regulatory risks, but with a fixed income and long contracts, utilities such as Southern Company and AT&T are great alternatives to bonds as fixed income sources.
For investors looking for growth Hormel Foods Corporation (NYSE:HRL) is a great alternative. The company belongs to the consumer staple sector, and is primarily engaged in the production of a variety of meat and food products. The company was founded back in 1891 and has paid uninterrupted dividends for more than 25 years in a row, meaning that the company is solid and can be trusted. The yield is only 2.17%, but the dividend grows each year buy around 16% and has a 10 year CAGR at 15%. For investors who have got time and the patience, Hormel Foods Corporation looks like a solid choice.
Medtronic (NYSE:MDT) belongs to the medical sector and provides medical products. The company was founded in 1949 and has grown into a global leader in medical technology, services and solutions. Medtronic has also paid uninterrupted dividends for more than 25 years in a row, which again is a strong sign of a high-quality business able to withstand pressure of any scale. The company fell 56% during the period of 2007 and 2009, which was about the same as s&p500, but was still able to increase the dividend. Medtronic yields 2.12%, but the dividend grows by 15% each year, and has a 10 year CAGR of 15%. Medtronic is a solid company which dividend growth investors should not neglect.
The author owns stocks in Hormel Foods Corporation and AT&T.