Recent volatile markets (read: soul-crushingly negative) have investors thinking twice about committing new capital to equities both foreign and domestic. Alas, with fixed income yielding next to nothing, it makes some amount of sense to step out on the risk curve and start looking at equities.
That's why Breakout invited Jason Pride, the Director of Investment Strategy for Glenmede Investment & Wealth Management to offer some thoughts on long ideas offering dividends and good valuations to shore up your buffeted portfolios.
Philip Morris International (PM): The international spin-off of Philip Morris (not to be confused with the domestic side, Altria (MO)). Pride says PM gives investors a 4% yield at 14x earnings. The valuation and the stability of economically-insensitive cigarettes give investors a decent amount of cash flow without the legal overhang of its old partner company's legal issues.
Yum! Brands (YUM): The parent company of brands such as KFC, Taco Bell, Pizza Hut, and other great businesses with products you may not wish to actually use, has strong growth in China. While everyone else says they have "strong growth in China," Yum walks to the talk, having been able to penetrate the ancient land well before China became a cult-phrase. Pride says the rapidly growing wages of Chinese workers coupled with KFC's reputation in China as a "go-to places for reasonably valued" meals make it a winner. Yum may not be as "stable" as PMI but it offers a better chance at growth.
Wisdom Tree Japan Hedged Equity Fund (DXJ): Pride's final and most obscure pick, this Wisdom Tree fund offers a different way to get long the International markets without US exposure. Despite the hype about Japan's long-lasting flatline economy supported by the negative growth numbers released this morning, the country continues to have "significant exposure to emerging markets." This, coupled with the bargains created by the March tsunami, allows investors in DXJ a way to get long a country that's been given up for dead economically.
The Wisdom Tree fund is fully hedged to the Yen, taking the Bank of Japan's persistent efforts to manipulate its currency out of the investing equation.
- Glenmede Investment & Wealth Management