Question: What technology stocks would you recommend right now?
Answer:
- Cisco Systems Inc. (NASDAQ: CSCO)
- We feel it is inexpensive as it is trading for around $17.
- The company has nearly $8 a share in cash;
- $3 of that cash-per-share would pay off their debt, and
- Thus at $13 a share, we feel the company is worth more.
- The company has a sizeable market share in all their markets.
- Data usage is growing, so we feel the company is poised for growth.
- The stock pays a 1.4% dividend.
- We feel it is inexpensive as it is trading for around $17.
- Intel Corp. (NASDAQ: INTC)
- Intel is a mature growth company
- The stock pays a 3.2% dividend.
- Microsoft Corporation (NASDAQ: MSFT)
- Oracle Corporation (NASDAQ: ORCL)
- Apple Inc. (NASDAQ: AAPL)
- We would not buy at the current price, but deem it as a hold.
Question: Last year I convinced my daughter-in-law to move $38k from an IRA rollover to a Roth IRA account at Charles Schwab. She is 38-years-old and currently has the money sitting in a money market account. I don’t think she has enough money to go into individual stocks, and I don’t like mutual funds because they don’t pay dividends but once a year. Can you recommend any type of broad sector funds that pay dividends throughout the year?
Answer:
- Guggenheim Multi-Asset Income (NYSE: CVY)
- The exchange-traded fund has a universe of 125 to 150 securities, including United States-listed common stocks, American depositary receipts (ADRs) paying dividends, real estate investment trusts, master limited partnerships, closed-end funds and traditional preferred stocks;
- The ETF focuses across a wide variety of industries, and
- It pays dividends quarterly at 4.72% with an expense ratio of 0.65%.
- Wisdomtree Dividend Ex-Financials Fund (NYSE: DTN)
- Also an exchange-traded fund that focuses on high dividend-yielding stocks outside the financial sector;
- It consists primarily of large and mid-capitalization companies listed on the United States stock exchanges, and
- It currently pays a 3.17% dividend and has a low expense ratio of 0.38%.
- Franklin Utilities Fund (FRUAX)
- A mutual fund that focuses on undervalued utilities;
- It currently pays a 3.74% dividend and has an expense ratio of 0.63%, and
- However, utilities can suffer as interest rates rise, so an investor should be sure this fits into his overall financial strategy.
Question: I have mutual funds that pay dividends. The market has roller-coasted, as you know. I had gains on the way up that I paid taxes on. Then the value went down. When it came up again, I paid taxes a second time. Can I move money into a non tax deductible IRA (I’m above the limit). Then can I avoid paying taxes while it roller coasters?
Answer: We assume that the mutual fund dividends also include Capital Gain Dividends from sales within the mutual funds (in addition to regular/qualified dividends on the stocks/securities, etc. held in the funds).
- If you want to contribute the mutual funds to an IRA as your contribution…you can’t.
- IRA Contributions (Roth or Regular) must be made in cash (Internal Revenue Code Section 219(e)(1)).
- Exception: When property (securities, etc.) are rolled-over from a pension plan or IRA to another IRA, they maintain their character (i.e., cash, securities, property, etc.)
- You would have to:
- Sell the mutual funds first;
- Then contribute the cash to your IRA, thus being forced to pay tax on any gains that have accumulated up to this point, and
- Once inside the IRA, the cash could purchase mutual funds again (or anything else you might choose), and they would escape and further market fluctuations on their values.
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.
