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Retiring investment pro shares one last low-risk stock tip

Richard Band is retiring simply after we would possibly want him maximum. For the ones of you who don’t know him, Band has for 28 years been the editor of the Profitable Investing advisory publication. His area of interest has been low-risk methods for the long run, and he has delivered: Since 1991, which is when my Hulbert Financial Digest started monitoring him, his fashion portfolios on reasonable were 36% much less risky, or dangerous, than the stock marketplace as an entire.

To make sure, Band’s reasonable portfolio — now not strangely — didn’t do in addition to a higher-risk all-stock index fund. But my calculations display that he lagged the ones opponents by means of 2.four annualized share issues over the last 3 many years, which conservative traders would possibly imagine an appropriate trade-off for snoozing extra simply. Like on days like Monday, when the Dow Jones Industrial

DJIA, -1.90%

 shed 459 issues, or 1.nine%.

Fortunately, Band believes the marketplace’s contemporary weak spot supplies long-term conservative traders with cast alternatives to shop for high quality shares at decrease costs.

Among the few shares and ETFs Band recommends in the most recent factor of the Profitable Investing publication — his last as editor — a transparent favourite is Verizon Communications

VZ, -1.38%

 . His number one rationale: The corporate will pay a good-looking dividend — recently five.zero% — and is undervalued in his estimation; shares recently commerce at a P/E of 10.three (in line with FactSet) in line with estimated subsequent 12 months’ income, in comparison to a P/E of 16.nine for the S&P

SPX, -2.23%


Often a stock paying this type of top dividend is thought of as at grave menace of a dividend lower. But Band dismisses this chance in terms of Verizon on account of contemporary tax reform regulation. Notes Band: “Tax reform is doing wonders for this telecom titan’s bottom line. After-tax earnings for 2018 will likely surge as much as $2.7 billion, unleashing a torrent of free cash flow… VZ’s free cash flow this year will cover the dividend by a record margin. That means (1) your dividend is safer than ever, and (2) Verizon has plenty of room to kick the payout higher. I look for Verizon’s board to declare an 11th consecutive annual dividend increase in September.”

Moreover, Band says he’s “backing up the truck and loading Verizon into my family’s accounts.”

Another most sensible publication editor who recommends Verizon is John Buckingham, editor of the Prudent Speculator. In an e mail previous this week, with tongue best in part in cheek, Buckingham puzzled if Band’s retirement approach that he’s now the publication business’s elder statesman, since he started enhancing his carrier in 1990 — 28 years in the past.

In any case, Buckingham has this to mention about Verizon: “We agree with Mr. Band that the Tax Cuts and Jobs Act is likely to be a boost to the bottom line, given the former tax rate solidly above 30%, but we’re not convinced that all of those dollars flow through to free cash, considering employee rewards and likely increased cap-ex. That said, our Target Price is $63, which when combined with the generous (and likely increasing) dividend provides plenty of justification to rate the stock a buy from a total return potential standpoint.”

Note that even if Band himself is retiring, his publication will proceed, edited by means of Neil George, who his bio reviews is a former leader economist for a department of U.S. Bank and an accessory professor and board member of the Walker School of Business at Webster University.

In resolution to the query whether or not he himself could be open to “a Michael Jordan-style comeback,” Band emailed to mention: “Never say never, but first, let me see how I like this retirement thing!”

For additional info, together with descriptions of the Hulbert Sentiment Indices, cross to The Hulbert Financial Digest or e mail mark@hulbertratings.com .



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