Do 'Bad' Stocks Do Better than 'Good' Stocks?

Investors who aren't concerned about what businesses their investments are in might want to consider investing in 'bad' stocks, often referred to as 'vice stocks' or 'sin stocks', and now are referred to as the supposedly politically correct term, 'barrier stocks.' They are now called that because the industries have a barrier to entry. The industries include tobacco, alcohol, gambling, defense, adult entertainment, and other businesses that have negative connotations by many investors.

As a matter of fact, there is a mutual fund that used to be called the Vice Fund, but is now called the USA Mutuals Barrier Investor

Fund. (VICEX). Over the last year, the fund has significantly outperformed the S&P 500, rising 3.26% versus a drop of 2.36% for the S&P. Even over five years and ten years, the fund has outperformed the stock market in general. Year-to-date, the fund is up 3.69% versus a loss in the S&P.

If you are wondering what sort of stocks are in the Barrier Fund portfolio, here are the top eight holding:

Philip Morris International Inc (PM)
Reynolds American Inc (RAI)
Las Vegas Sands Corp. (LVS)
Altria Group, Inc. (MO)
MGM Resorts International (MGM)
Raytheon Company (RTN)
Wynn Resorts (WYNN)
General Dynamics Corp (GD)

Each of these stocks represent anywhere from 3% to 6% of the portfolio.

Rydex Leisure (RYLIX) is a fund that owns several stocks that are considered 'bad' or not so good, such as Philip Morris, Altria, and Reynolds American. It also owns McDonald's (MCD) as some investors consider fast food to be not-so-good.

Another fund that has occasionally been put in the vice fund category includes Fidelity Select Consumer Staples (FDFAX), which owns British American Tobacco, Reynolds American, and Altria. It also owns Pepsico (PEP) and Coca Cola (KO), which many consider not-so-good due to the sale of sugary drinks.

If you are not concerned about how your investment funds are used, buying the 'bad' stocks might be a 'good' strategy.

Disclosure: Author owns MCD, PEP, & KO. 

By Stockerblog.com

What Does Warren Buffett have in Common with Vice?

There is a mutual fund called the Vice Fund (VICEX), which invests in what it calls 'vice' oriented company that are in the business of either aerospace and defense, gambling, tobacco and alcoholic beverages. According to the company's web site, the fund says that "these industries tend to thrive regardless of the economy as a whole. In fact, they may have the potential to perform better when times are uncertain, leading many to view investment in 'Vice' industries as a solid strategy during recessionary periods." As of the end of November, the fund was up an amazing 9.62% year-to-date, while the S&P 500 generated a slightly above break-even return of only 1.08% during the same period.

It is interesting to note that many of the stocks in the Vice Fund have high yields, partially due to what I call the 'bad company discount'. Since many institutions and individual investors avoid these types of stocks, the buying arena is smaller than other stocks, causing the discount in price compared to other income stocks. This is especially true with tobacco and cigarette stocks, such as Altria Group Inc. (MO) which yields 5.5%, Lorillard, Inc. (LO) yielding 4.5%, and Philip Morris International, Inc. (PM) at a 3.9% yield, all of which are owned by Vice.

The alcohol stocks have yields but not as high as tobacco. Brown-Forman Corporation (BF-B), producer of Jack Daniel's and Southern Comfort, provides investors with a yield of 1.7%. Anheuser-Busch InBev (BUD), maker of Budweiser, yields 1.6%.

So getting back to the big question, what is the 'vice' stock that Warren Buffett's Berkshire Hathaway (BRK-A) (BRK-B) owns? The stock is General Dynamics Corp. (GD), which makes combat vehicles, weapons systems, munitions, and military ships. The stock trades at nine times forward earnings, and yields 2.8%. The company generated a very slight profit increase of 0.30% for the latest quarter, on a 2% revenue increase.

To see free lists of these stocks, WallStreetNewsNetwork.com has lists of Beer Stocks, Wine and Liquor Stocks, and Warren Buffett Berkshire Hathaway Stocks, which can be downloaded, sorted, and updated.

Disclosure: Author didn't own any of the above at the time the article was written.
By Stockerblog.com

Graphic Color Anti Smoking Pictures to Appear on Cigarette Packs: Future of Tobacco Stocks

On Friday, November 12, 2010, the Department of Health and Human Services announced in the Federal Register Volume 75, Number 218 the proposed rule called 'Required Warnings for Cigarette Packages and Advertisements.' As part of the proposal, the Federal government came out with a series of graphic, colorful picture warnings that would appear on the upper half of the top of the pack.

Many of these warnings are very disturbing, featuring such pictures as dead bodies, a man blowing cigarette smoke out of the hole in his throat, a mouth with lip cancer, etc. If you want to see a slide show of about a dozen of the proposed warnings, click HERE. Although the implementation isn't for a couple years out, it is bound to have some effect on future US sales.

Some tobacco companies offer incredibly high yields. Part of the reason for this is due to the stock trading at what I call the 'bad stock discount.' This discount comes about because many individual and institutional investors avoid the so-called sin stocks, also known as vice stocks. These companies can include such industries as gambling, alcohol, and adult businesses. But tobacco and cigarettes seem to be on top of the vice list. With fewer potential buyers of the stocks, the stocks trade lower that what other stocks would with similar financials and similar dividend payouts but non-vice businesses. The lower stock price causes the payout to reflect a higher yield. In addition, tobacco companies need to pay a higher payout in order to attract investors who would initially not look for a cigarette company stock.

Of the ten companies involved in tobacco in some way, eight of them pay dividends ranging from 2.7% to 8.4%. One of those stocks is Lorillard, Inc. (LO), a cigarette manufacturer with 41 brands including Newport, Kent, True, Maverick, and Old Gold. The company has been around since 1760; that's 250 years. The stock pays a yield of 5.1% and trades at 12 times forward earnings. The company's primary market is the United States, so it may be more affected by the upcoming warnings.

Philip Morris International, Inc. (PM) sports a forward price to earnings ratio of 14 and a yield of 4.3%. The company's brands include Marlboro, Merit, Parliament, Virginia Slims, L&M, Chesterfield, Next, and Philip Morris. The new US cigarette warnings shouldn't have any effect on the stock as its market is outside the US, including Canada, European Union, Russia and Eastern Europe, the Middle East, Africa, Asia and the South Pacific, and Latin America.

Universal Corp. (UVV) is a company that is not often mentioned in the financial press. The company, based in Richmond, Virginia, is a leaf tobacco merchant and processor which operates worldwide. The stock has a PE ratio of 8 and a yield of 4.3%. Its tobacco is used primarily for cigarettes, but also for cigars and smokeless tobacco products.

You can access a free Excel list of all the high yield tobacco stocks, which can be downloaded, sorted, and updated, at WallStreetNewsNetwork.com.

Disclosure: Author didn't own any of the above stocks at the time the article was written.

By Stockerblog.com

Top Yielding Tobacco and Cigarette Stocks

Barrack Obama was the first smoking president of the United Stated in many years. I don't know if he has quit smoking yet, but there are still a lot of people out there who do. If you have no objection to investing in cigarette stocks, you may want to consider the tobacco companies, especially because of their extremely high yields.

Vector Group Ltd. (VGR) is a Florida based company that has numerous brands of cigarettes including Liggett, Grand Prix, Eve, Pyramid, USA and nicotine-free Quest. The stock has a PE of 35, and pays a yield of 10.4%.

Reynolds American Inc. (RAI) makes and markets cigarettes and other tobacco products including the Camel, Kool, Pall Mall, Doral, Winston, Salem, Misty, Capri, Dunhill, State Express 555, and Natural American Spirit brands. The stock has a PE of 15, and pays a yield of 7.1%.

Altria Group Inc. (MO) is a Virginia based company that makes and markets cigarettes, cigars, and beer. It is the largest cigarette company by market cap in the US. The stock has a PE of 12, and pays a yield of 6.9%.

British American Tobacco plc (BTI) is a London based company that markets cigarettes and cigars under the Dunhill, Kent, Kool, Lucky Strike, Pall Mall, Rothmans, Vogue, Viceroy, and Peter Stuyvesant brands. It is one of the largest cigarette companies in the world by market cap. The stock has a PE of 15, and pays a yield of 7.7%.

Philip Morris International, Inc. (PM) markets Marlboro, L&M, Philip Morris, Chesterfield, Parliament, Lark, and Virginia Slims outside the United States. The stock has a PE of 13, and pays a yield of 5.3%.

Lorillard, Inc. (LO) has the Newport, Kent, True, Maverick, Old Gold, and Max brands. The have a PE of 12, and a yield of 5.5%.

If you like high yield stocks, you should check out electric utilities and gas utilities. You can also download an Excel database of monthly dividend stocks and utility stocks at WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com

Top Stocks of New York

New York is synonym of city, innovation, communication and finance, but New York is also a manufacturing and agricultural state. New York produces dairy products, cattle, vegetables and more. The state produces and exports minerals, automobile parts, computers and electronics, and chemical products.

Some interesting facts about New York follow:

1. New York City is the most populous city in the United States.
2. Adirondack Park, in the state of New York is the largest state park in the country.
3. New York City is the largest banking and finance center in the nation.
4. The state is the second largest producer of wine.
5. New York workers are the 37th best paid in the country.
6. New York City is the largest city economy in the United States and second in the world (after Tokyo).
7. New York State per capita personal income is $48,076.
8. The state’s main tourist destinations are: The Statue of Liberty, Niagara Falls, and New York City.
9. New York’s milk production makes 50% of all agricultural cash receipts.
10. New York exported goods valued at over $57 billion during 2009, making it the third largest exporter state in the country.

The following companies are headquartered in the state of New York:

JPMorgan Chase & Co. (JPM) is a worldwide known financial company. It offers investment services, commercial banking, asset management services, and retail financial services to individuals and businesses. The stock has a market cap of $182 billion, a PE of 15, a PEG OF 1.89, and it pays a yield of 0.4%.

International Business Machines Corp. (IBM) is a producer of information technology products. The stock has a market cap of $165.8 billion, a PE of 12, a PEG of 0.85 and it pays a yield of 1.7%.

Pfizer Inc. (PFE) is in the business of researching, discovering and producing new drugs for use in the prescription medicine industry. This biopharmaceutical company markets its products worldwide. The stock has a market cap of $138.3 billion, a PE of 7.9, PEG of 3.76 and it pays a yield of 4.2%.

Citigroup Inc. (C) is a financial institution that provides consumers with banking services, credit cards, investments and other services. Citigroup operates worldwide. Its clients include individual consumers, businesses, and government. The stock has a market cap of $127.7 billion, and a PE of 89.

PepsiCo Inc. (PEP) operates worldwide manufacturing and selling snacks, other foods and drinks. Some of its products are sold under the following names: Lays, Doritos, and Cheetos, Quaker, Rice-A-Roni, Aunt Jemina, Pepsi, Gatorade and 7-up among many others. The stock has a market cap of $109 billion, a PE of 16, a PEG of 1.58, and it pays a yield of 2.7%.

Philip Morris International Inc. (PM) produces and sells tobacco products and cigarettes to markets in the Europe, the Middle East, Africa, Asia, Canada and Latin America. The stock has a market cap of $98.8 billion, a PE of 14, a PEG of 1.37, and it pays a yield of 4.4%.

Goldman Sachs Group Inc. (GS) is an investment banking institution that serves wealthy individuals, corporations and governments across the globe. The stock has a market cap of $94.6 billion, a PE of 10, a PEG of 0.97, and it pays a yield of 0.78%.

Verizon Communications Inc. (VZ) is a telephone company providing wireless and wired telephone and Internet services in the United States and abroad. The stock has a market cap of $85.7 billion, a PE of 13, a PEG of 4, and it pays a yield of 6.3%.

American Express Co. (AXP) is a credit card and charge card company. It also offers travel services, travelers’ checks and prepaid cards worldwide. The stock has a market cap of $52.1 billion, a PE of 16, a PEG of 1.6, and it pays a yield of 1.7%.

Bristol-Myers Squibb Co. (BMY) is in the business of researching, discovering, creating and selling new drugs worldwide. Some of the medicines the company produces are used to treat psychiatric disorders, diabetes, hepatitis, HIV and other diseases. The stock has a market cap of $45 billion, a PE of 12, a PEG of 14.1, and it pays a yield of 4.9%.

For stocks from other states, check out Minnesota stocks, Oregon stocks, and Florida stocks.

Author owns VZ and PFE.
By Stockerblog.com

Stocks Going Ex Dividend the Fourth Week of March 2010

Here is our latest update on the stock trading technique called 'Buying Dividends'. This is the process of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend. This technique generally works only in bull markets. In flat or choppy markets, your have to be extremely careful.

In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can't sell the stock until after the ex date. The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a free downloadable and sortable Excel list of the stocks going ex dividend during the next week or two. The list contains many dividend paying companies, all with market caps over $500 million, and yields over 3%. Here are a few examples showing the stock symbol, the ex-dividend date and the yield.

Piedmont Natural Gas Company, Inc. (PNY) ex div date: $2.0B market cap: 3/23/10 yield: 4.1%

Xcel Energy Inc. (XEL) ex div date: $9.6B market cap: 3/23/10 yield: 4.7%

Portland General Electric Company (POR) ex div date: $1.4B market cap: 3/23/10 yield: 5.3%

Philip Morris International Inc. (PM) ex div date: $94.3B market cap: 3/23/10 yield: 4.6%

The additional ex-dividend stocks can be found at wsnn.com. (If you have been to the website before, and the latest link doesn't show up, you may have to empty your cache.) If you like dividend stocks, you should check out the high yield utility stocks and the Monthly Dividend Stocks at WallStreetNewsNetwork.com or WSNN.com.

Dividend definitions:

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Record date: the day when you must be on the company's books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

Don't forget to reconfirm the ex-dividend date with the company before implementing this technique.

Author does not own any of the above.

By Stockerblog.com

The Stocks that made Carlos Slim the Richest Man in the World

Now that Forbes has announced that Carlos Slim Helu has become the richest man in the world, investors are looking at the stocks that he owns and is connected with. Here are the primary companies that Slim is associated with.

Approximately one half of the shares of Teléfonos de Mexico (TMX), which is also known as Telmex, is owned by Slim and his family. This huge Mexico based telecommunications company, at which Slim has served a Chairman, has a forward price to earnings ratio of 10 and pays a yield of 4.4%. Earnings for the latest quarter were up 67.7% year over year.

Slim has also served as Chairman of América Móvil (AMX), which is the fourth largest mobile network operator in the world and the largest corporation in Latin America. It also operates the largest mobile operator in Mexico. The stock has a forward PE of 11 and a yield of 1%.

About 6.4 percent of the shares in The New York Times Company (NYT), the largest local metropolitan newspaper in the United States, is owned by Slim. The stocks has a PE of 16.

He is also on the Board of Directors for Philip Morris International (PM), which has over 15% of the worldwide non-US market for cigarettes. The company has a forward PE of 12 and a yield of 4.6%.

If you want to see the shareholdings of the third richest man in the world, Warren Buffett, you can get a sortable list at WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com