In a volatile stock market with a near-zero yield in money markets and 10-year Treasury bills yielding 2 percent or less, what’s an investor to do?
An increasing number of money managers are pinning hopes on an asset class that tends to do well no matter what the environment.
Build an “all-weather” portfolio of large multinational companies that consistently pay dividends, they say. It’s an approach that yields income even when the stock market declines.
“Multinationals are a pretty hot button right now for a lot of good reasons,” says Tom Huber, portfolio manager for T. Rowe Price’s Dividend Growth Fundfor the past 11 years. “Our diminished economic growth prospects are not as exciting as some emerging markets, and Europe is no better off. Today it’s important to invest disproportionately in emerging markets.”
If your long-term horizon is more than five years, there just aren’t many other good choices, says Fred Taylor, co-founder of North Star Investment Advisors. “Some multinationals are paying bigger dividends than 10-year bonds, sometimes twice as big," he says, "Buy companies with meaningful dividend yields of at least 2.5 percent annually that increase seven to 10 percent a year, and you’re way ahead of the game.”Page 1 of 6 | Next Page