Where Fund Managers are Looking for Yield

Read the companion article from TheStreet.com: ‘Cash Cow’ Investing: Finding Yield in 2012

TOM HUDSON: As Suzanne mentioned earlier in the program, stocks have gotten off to
a hot start this year, but dividend-paying stocks have not kept pace. That
brings us to tonight’s Word on the Street” — yield. Gregg Greenberg is
back with us, a reporter at thestreet.com tonight from the NASDAQ. Gregg,
is the search for yield over, in other words the time to dump dividend
stocks if the economy is picking up steam?

GREGG GREENBERG, REPORTER, THESTREET.COM: Absolutely not. From the
fund managers that have been coming to speak with me, the search for yield
is still on. And it’s going to be on as long as Treasury yields remain low.
Right now the 10-year is yielding about 1.9 percent and we heard from the
Fed just last week that they are going to be keeping rates low for the
foreseeable future, so as long as that is the case, people want yields.

HUDSON: So the hunt to get paid while you wait still is out there
and among them, fund managers highlighting stocks, include Intel (NASDAQ:INTC)
here,
yielding over 3 percent and close to a 52-week high. What is expected from
Intel (NASDAQ:INTC)?

GREENBERG: Well, that’s pretty surprising for a tech company. But
Intel (NASDAQ:INTC) has been on a tremendous run over the past few months. I
think it’s
up over 40 percent since September. It’s yielding 3.1 percent. It’s really
become unmoored. It was stuck at $20 a share for a long time but now it is
around $27 a share. And a lot of people say that Intel (NASDAQ:INTC) is finally
in the
right market. They are getting there when it comes to new gadgets like
tablets. And they could see a resurgence in PCs which is going to help
Intel (NASDAQ:INTC)’s business.

HUDSON: What about an increase possibly in dividends? Could that be
in the cards?

GREENBERG: Sure, Intel (NASDAQ:INTC) has money. It’s a tried and true tech
company.
It’s not being driven up by a short squeeze which is happening to a lot of
other technology stocks in this rally. You have to remember, this is a low
volume, low quality rally so far. You just have to look at the biotechs to
know that.

HUDSON: Meantime in the utility energy space, Southern Company (NYSE:SO), SO
the ticker symbol on this one yielding a healthy 4.25 percent, again a nice
march higher for the stock price. The question is, though, at this yield,
can the stock price continue to move and trend higher?

GREENBERG: Well, utilities were the best performing sector in the S&P
in 2011 and a lot of people think they can have another nice year in 2012.
Southern Companies (NYSE:SO) is one of the largest utilities in the southeast.
It has a nice yield and a lot of people see growth there as well. And it’s
regulated which reassures a lot of people about the stock.

HUDSON: You have seen certainly some selling pressure in utilities.
Best sector last year has turned into among the worst so far this year. An
ETF that pays a dividend that fund managers highlighted here, MUB, the
national municipal bond exchange-traded fund yielding about 3 percent.
Munis have been tarred and feathered over the past several years, but this
fund has done nicely.

GREENBERG: Actually, last year you had Meredith (NYSE:MDP) Whitney with her
big call about municipal bonds saying we’re going to see defaults around the
nation.

HUDSON: Didn’t happen.

GREENBERG: It did not happen and actually over the course of the
year, you saw the big sell-off and then you saw municipal bonds really gain
steam. The MUB had a tremendous run. But a lot of people say that it can
really still maintain these levels, maybe even move a little bit higher.
You have been seeing some pressure in some of the states. But a lot of
people say it’s good to be in munis. You get the tax benefit and it’s safe.

HUDSON: Can you, do you own any of these funds or stocks we
mentioned, Gregg.

GREENBERG: I do not.

HUDSON: You can read Gregg’s article at thestreet.com, a link on our
web site as well. It’s “Word on the Street” with Gregg Greenberg with
thestreet.com.


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