Question
I am underweight in the Financials sector. What stocks would you recommend?
Answer
We believe the long-term growth rate for banks would not be as profitable as it has been in the past 10 years. However, as banks are working through their issues with problem mortgages, some financial institutions are in a position where the government will allow them to begin paying dividends again. We suspect that could be as soon as second quarter 2011. If that were to happen, we expect to see a pop in the financial sector.
Sector Weight:
- We feel comfortable recommending a weighting of 12% to 15% of your portfolio in Financials.
- Currently, our Traditional Recommended Portfolio is underweight compared to the Standard & Poor’s Index.
Financial Holdings:
As of March 6, 2011, we own the following financial stocks:
- Wells Fargo & Company (NYSE: WFC)
- T. Rowe Price Group, Inc. (NASDAQ: TROW)
- AFLAC, Inc. (NYSE: AFL)
- The Travelers’ Companies Inc. (NYSE: TRV)
- Bank of New York Mellon Corp. (NYSE: BK)
- Cullen/Frost Bankers, Inc. (NYSE: CFR)
- IntercontinentalExchange, Inc. (NYSE: ICE)
If you are uncomfortable owning individual bank stocks, we recommend iShares Dow Jones Regional Banks ETF (NYSE: IAT), which provides exposure to a wide base of banks across the different regions of the United States.
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.
