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Moneypaper's DRIP Portfolio for April 2008 issue

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(Leaving aside the increased value of the portfolio (which reached a high of $584,000!) the fact is that a $100,000 investment to create it 20 years ago is now providing $20,916 of annual income. We anticipate that it could be throwing off more than $100,000 by age 65--for our investor who was 30 years of age when he established the portfolio. )

For this month’s  portfolio, we surveyed our staff of stock experts (Bob Briechle, Mike Burke, Pete Cirocco, Dave Fish, and Pat Racaniello) and asked for their favorite long-term picks right now. No one was allowed to peek at anyone else’s list. Their resulting choices produced an array of strong, high-quality issues with long histories of rewarding their shareholders, firms that possess hefty market shares for their goods and/or services, and companies that possess the financial muscle to ride out most economic cycles.

One such pick is Illinois Tool Works, chosen by both Bob Briechle and Pat Racaniello. ITW has successfully grown through strategic acquisitions, adding roughly 40-50 companies per year, which in turn has increased annual sales. Both earnings and dividends have been doubling about every 5-6 years, and ITW has had only one year (2001) since 1991 when earnings did not top the previous year. These results are a sure sign of competent management and business planning.

Another high-quality issue is Pfizer, which was chosen by both Pete Cirocco and Mike Burke. Pete likes its high yield (over 6%), low price/earnings ratio (17), and low market price ($21). Mike says, “Pfizer was around $50 several years ago, when Viagra came on the market and the stock had moved up strongly in anticipation of that event. Now the stock is at $21, pays a way above-average dividend yield, is in the depressed drug group, and has gotten unpopular with investors. It could well move back to the $50 area for a significant percentage gain.” One of Dave Fish’s picks is also trading near to its 52-week low than its corresponding high. Dividends have been paid since 1976 and the stock has had 10-year annual earnings and dividend growth of about 9%, which may increase over the next several years. Dave says, “PNR provides water treatment/purification equipment, and is aggressively expanding these operations overseas.” As an example, it has already installed 80 water treatment systems in India and plans to boost that number by 50-60 systems per month through the end of 2008.



Companies in this month's protfolio (Click company symbol to order stock)
Click company symbol to order stock. Only full-term subscribers have access to company capsule reviews.
ALLTEL (AT) Heinz (H.J.) (HNZ)
!Altria (MO) !Lily(Eli) (LLY)
!AT&T (T) Natural Fuel Gas(NFG)
Aqua America (WTR) Piedmont National (PNY)
Bank of America (BAC) Pinnacle West (PNW)
BB&T Corp. (BBT) !Progress Energy (PGN)
ConAgra (CAG) RPM (RPM)
ExxonMobile (XOM) Southern Co. (SO)
Genuine Parts (GPC) Wrigley (WWY)

 
For more information and/or to receive the bi-weekly Commentary from executive editor David Fish (which includes the $15 special stock selection), please enter your contact information below.

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