"You have $100,000 to invest today. Where would you invest it and why? Be very specific (e.g. which type of security, company, etc.)"
I thought I would share my response with you guys:
"I could divide my portfolio into two very broad categories, the first being an emphasis on Value-Based Dividend Growth equities. The goal here is to find well managed companies, being offered at bargain prices, which also have a strong chance of raising dividends as time progresses. I do not hold any fixed-income debt. With that being said, I consider this to be the income portion of my portfolio and the most conservative. The companies I look for can broadly defined as those which:
- have a long history of dividend increases
- have strong free cash flows to sustain dividends
- have well structured and well managed debt obligations
- have dividends that significantly outperform treasuries and other "safe" investments
- Are value companies offered at bargain prices. One metric I focus on is to look for companies with high earnings yields and high return on capital.
- Abbott Laboratories
- Eli Lilly and Company
- Johnson & Johnson
- United Technologies Corp.
- Hewlett Packard
- Dow Chemical
- GLD for gold
- ADF, an Agriculture exclusive ETN
- Lynas Corporation for rare earth metals
- the NASDAQ clean edge ETF for novel and alternative energy
- Textainer Group as a play on global shipping
Phew, a 3 minute breakdown of my current strategy. Of course, you should always do your own research before you enter into any positions.