Sunday, December 19, 2010

My Investing Themes for 2011

Based on the outcome of the 2010 mid term elections, I expect that government policies will be more pro-economic growth and pro-business development. Thus, for 2011, I will have an overall investing theme of buying stocks. Specifically, I will concentrate on two types of stocks:

  • Dividend paying stocks. As I've written previously, dividends account for about 40% of the stock market returns. In addition, there are many good stocks paying 3-6% dividends which is significantly above the 5 year CD rates. Finally, with the extension of the Bush tax cuts, dividends are taxed at either 15% or 0% depending on the taxpayer's marginal tax rate.

  • Large cap growth stocks. As the economic recovery continues, large cap growth companies should continue to benefit, growing revenues and profits. Also, as interest rates rise, large cap companies will have sufficient financial strength to maintain growth.
  • In our managed accounts, I have already put more funds with a large cap growth stock investment manager. In 2011, I plan to put additional funds with a dividend stock investment manager. For our own trading accounts and IRAs, I will focus purchasing large cap stocks with dividends greater than 3%. In the next couple weeks, I will be doing research to identify specific dividend stocks and making some initial purchases in our personal accounts.

    For more on New Beginnings, check back every Sunday for a new segment.

    This is not financial advice. Please consult a professional advisor.

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