Market Volatility is Here to Stay says Street Critique guest Kyle Harrington

TOM HUDSON: Volatility, politics and dividends — those are three trends
expected to continue throughout the autumn until Election Day at least —
so says tonight’s “Street Critique” guest. We welcome Kyle Harrington, founder of Harrington
Capital Management, to the program. Kyle, it’s nice to see you. Welcome.

KYLE HARRINGTON, FOUNDER, HARRINGTON CAPITAL MANAGEMENT: Tom,
greetings. How are you?

HUDSON: I’m well. Volatility and politics are just facts of life these days for everybody, including investors. But dividend stocks, are you concerned that the rally, the movement into dividend stocks maybe over?

HARRINGTON: I think with volatility comes opportunity. And yes, a lot of people have poured money into the dividend-paying arena. But we just think you just need to be a little bit more diligent about picking the appropriate securities in that marketplace and/or the mutual funds that designate their investment philosophy to dividend paying stocks.

HUDSON: All right. Always looking for income there and you’re trying
to find it from KMB, Kimberly-Clark (NYSE:KMB), the consumer goods
manufacturer. It has had a nice rally from the low 60s here, to the low
70s since September.

HARRINGTON: Right.

HUDSON: It still pays 4 percent yield. What’s left?

HARRINGTON: Well, look, 3.9 percent dividend yield, we call this
stock dividend aristocrat — 39 years in a row, this company has raised its
dividend. And the brand that you would recognize is Kleenex.

HUDSON: Yes.

HARRINGTON: In recessions and boom times, people need toilet paper,
need to use some of these consumer products. So we think it’s a staple of
the economy. It’s got worldwide diversification in terms of the investor
base. We like it.

HUDSON: Kyle, what do you anticipate out of the stock price itself
from the low 70s?

HARRINGTON: Yes, I think that, you know, it’s a move into the mid to
high 70s. I don’t think it’s an incredibly big move on the capital gain
side.

HUDSON: What kind of time frame?

HARRINGTON: You know, I think in three to six months.

HUDSON: OK.

HARRINGTON: And we like to be rewarded through a dividend while we do
it.

HUDSON: Certainly getting paid there. You also like Intel (NASDAQ:INTC), one of those technology shares that does pay a pretty decent dividend, yield 3 percent. Here, it’s close to $27 per share. Again, you could have picked this up in the fall below $20.

HARRINGTON: Right.

HUDSON: What kind of share price — it could be a volatile stock being
in technology, though, couldn’t it?

HARRINGTON: Could be. You know, Tom, listen, $15 billion in cash on
the balance sheet. Warren Buffet owns $200 million of the stock. We like
the trade. We think the 3 percent dividend yield, and the technology
sector, very entrepreneurial. I think it will continue to be the sector
that drives the entrepreneurship in this country.

For a portion of one’s portfolio, we like to own it.

HUDSON: All right. For Kimberly-Clark (NYSE:KMB) and Intel
(NASDAQ:INTC) — do you and your investors have positions in it?

HARRINGTON: Yes.

HUDSON: What kind of holding time frame, by the way, are you looking
at for these stocks?

HARRINGTON: You know, it all depends upon each individual’s risk
tolerance. Remember, we’re separately managed account investment advisors.
So, everybody’s risk tolerance is different.

But when we go into securities, it’s a minimum of three months.

HUDSON: OK.

HARRINGTON: Sometimes, we hold a stock for two years.

HUDSON: There you go.You can e-mail some questions to us if you got them. The email
address if streetcritique@nbr.com, and it’s our guest from the NASDAQ, Kyle
Harrington.


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