Question:
I’d like to get your opinion on Stanley Black & Decker, Inc. Seems like it has a pretty good dividend, and is priced around their midpoint of their 52-week low/high. Think this one is a buy?
Answer:
Stanley Black & Decker, Inc. (NYSE: SWK) provides power and hand tools, mechanical access solutions, and security systems and products for both commercial and residential customers. At a P/E of 12.57, the company’s stock trades at a slight discount to its historical valuation. The stock currently has a dividend yield of 2.9%, which is nice, but the stock does have a slightly high beta at 1.20, which means that the stock is a bit volatile. The company has an expected growth rate of 12% as well.
It could be a good play, considering that we are in a market where people are doing their own home repairs, or purchasing foreclosures and doing the remodeling and upgrades themselves. The average do-it-yourselfer is a key customer segment for the company. If you own the stock, we recommend holding, and if you do not already own, we would be OK with a small purchase.
Question:
I was looking at Corning Inc. It is one of those companies that has been around forever. It seems to be diversified in what they do, but the price is just low. What gives?
Answer:
Corning Inc. (NYSE: GLW) operates in display technologies, telecommunications, environmental technologies, specialty materials and life sciences. The company provides touch-screen displays, plasmas and LCD screens. For a long time, they had little competition. We feel that boom is over now and that the market is saturated with competition.
The stock is volatile, as a result of the competition in the marketplace. It pays a 2.5% dividend, but with the stock price below $15, there is not much institutional interest. We do not recommend that you this stock.
Question:
My mother’s investment club is looking at Kinder Morgan. All my mom could tell me was it paid a good dividend. I know there is more to it than that.
Answer:
It is important to first address which Kinder Morgan security your mother is referring to. Kinder Morgan, Inc. and Kinder Morgan Energy Partners, L.P. operate differently as one is a corporation, and the other, a limited partnership. Kinder Morgan Energy Partners, L.P. (KMP) is a pipeline transportation and energy storage company in North American who owns an interest in approximately 29,000 miles of pipelines and 180 terminals. The shares pay a dividend close to 6%; however, because of the structure of the business, a portion of this dividend is a return of principal, which can complicate your taxes.
Kinder Morgan Inc. (KMI) on the other hand is one of the largest energy transportation and storage companies in North America. The company yields less than the L.P. at a yield of 3.9%; however, there is no additional tax complications like you see in the L.P. structure. While the dividend is strong, we have expected the company to cut it, but they have yet to do so. If you currently hold shares of KMI, we would recommend holding but do not recommend purchasing shares at this time. If you are interested in the higher yield of the L.P., you may want to consider KMP; however, you should fully understand the potential tax implications before purchasing.
Question:
If I wanted to invest and stay even with the markets, would it be ok to select an ETF that tracked the major indices, say PowerShares QQQ Trust?
Answer:
Exchange-traded funds are a very cost-effective way to track the markets. PowerShares QQQ Trust (NASDAQ: QQQ) tracks the top 100 NASDAQ technology stocks. There is SPDR S&P 500 ETF (NYSEARCA: SPY) for tracking the S&P 500 index. These ETFs are very inexpensive, as far as expenses, charging only 20 basis points, or 0.20%. Many mutual funds charge near 2% in expenses.
Index ETFs, generally, have a very low tracking error, meaning they have little difference between the return they earn and the return of the benchmark the ETF is attempting to imitate. We find index ETFs a good place to start, as you can also learn more about individual stocks in the ETF. You could find some stocks that you want to buy individually.
At Henssler Financial, we believe you should Live Ready, and that means understanding the investments you are considering. If you have question regarding the stocks you are considering, the experts at Henssler Financial will be glad to help. You may call us at 770-429-9166 or email at experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
