For Immediate Release
Chicago, IL – March 1, 2019 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:
Are There Any "Safe" Stocks?
Welcome to Episode #131 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.
Warren Buffett has been doing a mea culpa lately about Berkshire Hathaway’s investment in Kraft Heinz (KHC - Free Report) .
Not only did Berkshire take a $3 billion write down thanks to it but when Kraft Heinz shares fell 27% in a single day, Berkshire “lost” $4.3 billion.
Buffett admitted he overpaid for Kraft but he also said he has no intention of selling his investment now.
Many investors, however, are having second thoughts about some of the older blue-chip stocks.
In 2018, General Electric (GE - Free Report) slashed its dividend and shares sank to a multi-year low.
In January 2019, Tupperware cut its dividend by more than 50% and shares plunged 17%. It was the first dividend cut for the company since 1996.
Are There Any Stocks that are Considered to be “Safe”?
The quick answer is: no.
Even Buffett has been caught in some unexpected surprises with his investment even though Kraft owns such well-known brands such as Jell-O, Kraft Macaroni and Cheese and Kool-Aid which have been around for decades.
Longevity doesn’t necessarily equal safety.
Which Companies Are Raising the Dividend and Yet are Still Cheap?
While not a sure thing, a rising dividend, year-after-year, at least provides some level of comfort to investors even though it’s not a sure thing that the company is well-managed, as we saw with GE.
These two companies have been raising their dividend for years.
Philip Morris (PM - Free Report) has raised its dividend every year since 2008. This is an international tobacco company so regulations and changes in trends will impact its business, however. It has a forward P/E of 16.2 and its dividend is yielding 5.3%.
Phillips 66 Partners LP (PSXP - Free Report) is a refiner which has raised its dividend every year since it was spun-off from ConocoPhillips in 2013. It’s cheap with a forward P/E of 12. It also has a juicy dividend yield of 6.6%.
They are both Zacks Rank #2 (Buy) stocks.
What’s the Lesson from the Kraft Heinz Blow-Up?
Every investor should always do their research on any company they buy.
But even research might not protect you from a dividend cut or government investigation. Even Warren Buffett has gotten caught in what is going on at Kraft Heinz.
No stock is “safe” which is why all investors should be diversified.
While Kraft Heinz is a big position in Berkshire’s portfolio, it has plenty of cash on hand and other investments in which to ride out the volatility in Kraft Heinz.
What else should you know about “safe” stocks?
Listen to this week’s podcast to find out.
[In full disclosure, the author of this article owns shares in PXSP.]
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Investment Research
800-767-3771 ext. 9339
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.