Sunday, November 30

Week 178 - Agricultural Cooperatives, Part B

Situation: (This is the second blog in a two-part series.) Agricultural Cooperatives represent a tried and-true-method for maximizing farm productivity. But they don’t do much for the bottom line of anyone other than their farmer-owners, and the companies the co-ops do business with (the focus of our blog for this week). Production Agriculture is at the mercy of the weather. When it’s good, crop prices fall; when its bad, crop prices rise. That’s a roller-coaster ride for farmers but investors seek out asset classes that don’t track GDP, and for the obvious reason (which is to reduce the volatility of their portfolios). The companies that supply farmers (and buy their grain & cattle) are certainly in that category. 

For last week’s and this week’s blogs, we are studying a 14-county section of Central Nebraska to see which public companies co-locate with farmer’s cooperatives. In last week’s blog (Week 177), we analyzed the 7 largest Agricultural Cooperatives in that reference area. For this “pure-Ag” region of the country, we’re not surprised to find that the operations of public companies are clustered around 6 cities, which are all situated near the main source of water for the region, the Platte River. Those cities are: Columbus, Grand Island, Hastings, Kearney, Lexington, and North Platte. We found 21 public companies that service farmers and ranchers in that reference area. Table A shows the juxtapositions of 7 cooperatives and 21 public companies, county by county. In last week’s Table A, those companies were denoted only by their stock tickers because we wanted to wait until this week to focus on financial activities and investment metrics (see this week’s featured Table B). For reference, we’ve included Table A from last week’s blog. You’ll need to work back and forth between these two Tables, since there’s a lot of material to consider. 

All 3 major seed producers are represented: Monsanto (MON), Syngenta AG (SYT), and DuPont-Pioneer (DD), as are the 3 largest farm-equipment manufacturers: Case-International Harvester (CNHI) which manufactures combines in Grand Island; John Deere (DE) which has sales & service outlets in all 14 counties, and Caterpillar (CAT) which has sales & service outlets in Grand Island and North Platte. The Andersons (ANDE) has a large grain storage and marketing facility in Kearney. Other agri-business companies include CF Industries (CF) which produces fertilizers, and Flowserve (FLS) which manufactures irrigation pumps. Archer-Daniels-Midland (ADM) is the largest company in the farm products industry and it operates an ethanol plant in Columbus. Green Plains (GPRE) operates ethanol plants in Hall and Merrick counties. Fastenal (FAST) has sites for manufacturing building components throughout the area. Cummins (CMI) manufactures and services the diesel engines that are the typical power source for center-pivot irrigation systems. Raven (RAVN) manufactures GPS guidance and assisted steering systems for tractors. Tractor Supply (TSCO) has outlets throughout the area. Both of the major center-pivot irrigation companies have plants there as well: Valmont Industries (VMI) and Lindsay (LNN). Tyson Foods (TSN) and JBS South America each have a large meat-packing plant here. NOTE: In 2007, JBS S.A. (JBSAY) acquired Swift & Company (based in Greeley, CO). The US subsidiary of JBS S.A. is Pilgrim’s Pride (PPC), based at the former Swift & Company headquarters in Greeley. 

For the most part, farmers in the area buy their building materials, hardware and other construction supplies from local privately-owned companies, so Big-Box discount stores are underrepresented. Home Depot has one store (in Grand Island) but there isn’t a Lowe’s in our reference area (there’s one in Lincoln, NE). Ace Hardware has 5 stores, with one in Kearney, one in Hastings, and 3 around Grand Island. Wal-Mart Stores (WMT) are found in each of the 6 major cities, and Grand Island has two. Looking again at Table A to see where cooperatives and public companies congregate (Column AK), activity focuses on 3 cities that are within 40 miles of each other, those being Kearney, Hastings and Grand Island, also known as the “Tri-City Area” (Est. population 150,000).

To the uninitiated, it can seem that the production of agricultural commodities would differ little from the production of other commodities, like oil or iron ore. Our first guess would be that facilities can only be expanded slowly and at great cost. Following the laws of supply and demand, one would estimate that technological advances will occur and expansion costs will be met only when supplies are insufficient to meet demand. The resulting bounty is initially profitable but then overproduction turns that bounty into a glut. Prices for those now (too) abundant commodities will fall, and fall far enough to match demand. Agricultural commodities, however, have two advantages over other commodities: 1) Governments cannot remain in power if food is scarce; 2) food production doesn’t depend on the economic cycle (it depends on the weather). Those two facts give investors an advantage. They know that famines won’t be tolerated, and they can hedge their bets on the economic cycle by investing in the companies that sustain Production Agriculture. And, it won’t be long before they’ll also be able to invest in the agricultural cooperatives that are at the heart of Production Agriculture.

Bottom Line: As shown in Table B, your options for investing in Production Agriculture (as practiced in Central Nebraska) come down to 21 publicly-traded common stocks and one preferred stock (CHSCP) which is issued by CHS Inc., the largest agricultural cooperative in the US. For the most part, these companies are not in the business of processing food for sale in grocery stores, although there are two meat-packing plants in our 14-county reference area. Approximately 40% of grain produced there is destined for one of 9 plants in the area that make motor fuels (soydiesel or ethanol), with animal feed being a major byproduct of those plants.

Risk Rating: 7

Full Disclosure: I dollar-average into WMT and MON, and also own shares of CF, CMI, FLS, DE, and DD.

Note: All of the metrics in our Tables are current as of the Sunday of publication.

Post questions and comments in the box below or send email to: irv.mcquarrie@InvestTuneRetire.com

Sunday, November 23

Week 177 - Agricultural Cooperatives, Part A

Situation: Agriculture has become big business in the US, and investing in it requires an understanding of a collection of businesses that support AgriBusiness. These businesses are collectively grouped under the title of “Production Agriculture.” They supply the farmer and market his crops. To really understand Production Agriculture you need to understand farmer’s cooperatives. Most farmers band together in local or regional cooperatives, designed to meet their need for supplies (fuel, tires, feed, seed, crop protectants, fertilizer and equipment) and provide a place to deliver their crops. Nationwide, this $3 Trillion cooperative industry is almost entirely funded by member-owners. However, some of the larger regional cooperatives are finding that they need to issue stocks or bonds to finance opportunities for growth. 

What this means for investors is that investing in Production Agriculture requires paying attention to companies that sell to farmer’s cooperatives. You’ll need to know which companies do business in close association with the farmer’s cooperatives. For example, seed companies pursue a dual path. One group of salesmen will market to “seed advisors” who work with individual farmers but a larger group will market to farmer’s cooperatives. It is obviously important to place seed production plants near cooperatives. 

According to the US Department of Agriculture, there are ~2300 agricultural cooperatives in the US. In 2013, those had record sales of $246B and record net income (before taxes) of $6.2B. A third of those cooperatives had sales under $5M but 33 had sales over a billion dollars. Earnings are either retained by the Cooperative for reinvestment or returned to member-owners. 

The largest agricultural cooperative is CHS, in St. Paul, MN. CHS issued a convertible preferred stock (CHSCP) on March 24, 2003, and a second series (CHSCM) on September 16, 2014. While that route to capitalization brings CHS under regulation by the Securities and Exchange Commission (SEC), it allows CHS to expand into international markets. The growing need for capital simply could not be met by a partnership-style corporation. Over time, most of the largest regional cooperatives will have to go to Wall Street for capital, if they want to grow their brands globally. Those stocks and bonds will be attractive to investors for the simple reason that weather patterns (and growth of the middle class in Asia), govern the profit of farmers cooperatives, not economic patterns. Every investor has to take an interest in such non-correlated assets. Why? Because over time those types of assets will reduce the volatility of her portfolio (Beta). Think of it as insurance against stock market crashes.

This week’s blog will introduce you to farmers' cooperatives here in the Platte River valley of Central Nebraska where I live. We’ll take a close look at AgriBusiness in 14 counties (see Table A). Those counties had a population of 285,282 in 2011, which translates into 26 people per square mile. Ah, yup, that’s right--when you do the math, it means that there are 25 acres per person. And for readers who live in cities, that probably sounds like there are a lot of lonely places. There are also 6 cities with enough people in the urban core (10 to 50 thousand) to be classified as a micropolitan statistical area (microSA): Columbus, Grand Island, Hastings, Kearney, Lexington, and North Platte. The largest microSA is Grand Island, with a population of 73,551, and the smallest is Lexington microSA. There is scheduled airline service at Kearney, Grand Island, and North Platte. The largest college is the University of Nebraska at Kearney, with 7100 students. The 14-county area straddles US highway 30 for 276 miles along the Platte River in the east-west direction, with the halfway point east of Lexington. US highway 281 spans the greatest north-south dimension for 72 miles, with the halfway point at Grand Island.

Seven of “The 100 Largest Agriculture Cooperatives” have operations in that 14 county area (see Table A):

   1. CHS Inc., based in St. Paul, MN, with revenues of $37B in 2011 (including branded fuels). CHS is a Fortune 100 Company with almost ~$90B in assets. It owns and operates two oil refineries. Those support more than 1400 CENEX service stations in 19 states, including stations in all 14 of our reference counties (see Column N in Table A). CENEX co-brands with Cabela’s to offer a VISA card with a rewards program. For every $100 spent at a CENEX station (or Cabela’s) the cardholder is entitled to $2 off on a her next purchase of outdoor equipment at Cabela’s. CHS mainly produces food ingredients from US soybeans for sale worldwide. CHS food brands are marketed by Ventura Foods and include Dean’s Dips, Marie’s salad dressings and dips, and LouAna peanut oil.

   2. Land O’Lakes Inc., based in St. Paul, MN, with revenues of $13B in 2011. Dairy foods are marketed under the Land O Lakes, Alpine Lace, and Kozy Shack brands. Animal feeds are marketed under the Purina Animal Nutrition (formerly Ralston Purina) and Land O’ Lakes Feed brands. Seeds, and crop protection products, are marketed under the WinField brand. NOTE: CHS is partnering with WinField to operate 6 “CHS, WinField Seed and Agronomy Centers” in Nebraska; the first store opened this summer in Minden.  

   3. Ag Processing Inc. (AGP), the world’s largest soybean processing cooperative, is based in Omaha, NE, and had revenues of $4.4B in 2011. Branded products include SoyGold (biodiesel) and AminoPlus (a “bypass protein” that cannot be degraded in a cow’s rumen). AGP’s Nebraska plant is located in Hastings. AGP also partners with Masterfeeds, the second-largest animal feed company in Canada. 

   4. The recently merged Central Valley Ag and United Farmers cooperatives (together they’re now called CVA) is based in York, NE, and had consolidated revenues of $1.0B in 2011.

   5. Aurora Cooperative Elevator Company Inc., based in Aurora, NE, had revenues of $0.9B in 2011. It is the dominant cooperative in our reference area (see Column I in Table A).

   6. Cooperative Producers Inc. (CPI), based in Hastings, NE, with revenues of $0.7B in 2011.

   7. Ag Valley Co-op, based in North Platte, NE, with revenues of $0.4B in 2011.

This week’s Table, called Table A, lists activities by county. Cooperatives are ranked left to right by revenues. Then there is a gap (at Column L) followed by 22 columns arrayed under the ticker symbols for 22 companies (including CHS) that have operations in our 14-county reference area. Those companies will be the focus of next week’s blog, where Table B (which will accompany next week’s blog) will list those companies in descending order of their Finance Value. That order is the same as the left-to-right order of their appearance in this week’s Table A. Looking again at Table A, you’ll see another gap (at Column AI) followed by locations of the 6 ethanol plants that aren’t operated by either Archer-Daniels-Midland (ADM in Column T of Table A) or Green Plains (GPRE in Column AF of Table A), and locations of the 5 Cargill railheads (see Column AK in Table A). Cargill is a large private company based in Minneapolis, MN, with worldwide food logistics and meat-packing operations. 

Bottom Line: This 14-county area in the center of Nebraska is a hot zone of agricultural activity. More than half the profits go to farmer’s cooperatives. Wall Street banks have no interest in those, aside from the largest one, CHS, which issues preferred stocks listed on public exchanges (CHSCP, CHSCM). More cooperatives will offer stocks and bonds if they want to have the capital needed to market their products throughout Asia. People saving for retirement need to pay attention to these developments because the fate of production agriculture stocks and bonds will depend on weather and growth of the middle class in Asia, not global economic patterns. In the meantime, investors can pick stocks from companies that work hand-in-glove with farmer’s cooperatives. You’ll find 20 of those in Table B, which accompanies our blog for next week: Agricultural Cooperatives, Part B. That blog will also include Table A, for ready reference.

Risk Rating: 7

Full Disclosure: I dollar-average into WMT and MON, and also own shares of CF, FLS, CMI, DE, and DD.

Post questions and comments in the box below or send email to: irv.mcquarrie@InvestTuneRetire.com

Sunday, November 16

Week 176 - Non-Speculative Stocks

Situation: Here at ITR, we “mine” data that are readily available on the internet. The idea is to use objective information to help retail investors avoid disappointment. The main problem, of course, is that American corporations tend to expand by borrowing the money needed. Why? Because interest payments aren’t taxable. Each year, the average company spends 5% more on expansion than it can afford to extract from its cash flow. That 5% has to be borrowed. Presumably, the company’s growth plan will bring in enough additional cash flow to pay back the loan. (Would that the world were so kind!) 

If a company keeps growing its long-term debt (instead of paying it down), investors will shy away and its stock price will plateau, or even fall. The company then has to create incentives that keep investors from abandoning it. For our investment purposes, we like the one where the company pays a nice dividend and grows it ~10%  each year. That incentive, however, requires even more cash flow. Now the company may have to borrow more money to remain true to strategy. This means the company will have to revise its business plan, e.g. get rid of underperforming divisions. (Even “blue chip” companies like Procter & Gamble face this dilemma.) Tangible Book Value may disappear as interest payments keep rising. The dividend payout (as a percent of earnings) will likely drift higher, and when it gets higher than 50-60% long-term investors start to bail out of their positions.

You get the point. Even the soundest of companies will eventually face an opportunity for expansion that cannot be afforded without borrowing money. That is why the US government has created an incentive to take out that loan by waiving taxes on the part of earnings that will be used to make interest payments. The government calculates that the expanded company will be able to pay more taxes soon, and everybody wins. In reality, the company is taking a gamble and the government is a partner in that gamble. Now you see why there are very few of what can truly be called “non-speculative” stocks. For this week’s blog, we’ll try anyway to identify some. By using the following screening metrics, we’ve come up with a short list of what we think are “buy-and-hold” companies:
   1. The company’s bonds have an S&P credit rating of A- or better.
   2. The company’s stock has an S&P rating of A-/M or better.
   3. The company is an S&P Dividend Achiever with at least 10 yrs of dividend growth.
   4. The company has a positive tangible book value (TBV), as calculated by S&P.
   5. The stock price is less than 7.5 x TBV.
   6. The company’s dividend payout is no more than 50% of earnings (65% for utilities).
   7. The company’s EV/EBITDA is no more than 14.
   8. The company’s stock investors lost less than 60% during the 18-month Lehman Panic.
   9. The company’s Finance Value (Col E in the Table) is better than -40%.

What’s EV/EBITDA? Its a time-proven way to get a better handle on stock valuation than P/E. EV stands for Enterprise Value, which is what a private equity firm would need to pay if it wanted to buy the company, meaning it would assume responsibility for the company’s debts and purchase all outstanding shares of its stock. EV is “neutral” with respect to capital structure: bonds and stocks are treated the same. EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization, i.e., operating earnings. EBITDA is “neutral” with respect to capital expenditures. They’re not included. Unlike P/E, EV/EBITDA can’t be fudged.

We’ve identified 13 companies (see Table) that meet all 9 requirements; they’re not overpriced. These companies learned to grow by investing retained earnings rather than borrowing more money. When retained earnings proved insufficient, they tended to issue more stock. Their managers and shareholders accepted the fact that they’ll be paying more taxes than if they’d borrowed the money. This means they’ve learned to delay some capital expenditures. In other words, opportunity risk has replaced credit risk. Metrics in the Table that have been highlighted in red to indicate underperformance relative to our benchmark, the Vanguard Balanced Index Fund (VBINX). 

Stepping back for a moment, to reflect on our method for coming up with that list of 13 buy-and-hold stocks, you’ll note that we depend on measurements of past performance. In a history class, “the past is prologue” but not in Corporate America. The character of management personnel is determinative and difficult to measure, which is why we’ve used multiple metrics to steer you away from companies that are addicted to debt. Fortunately, we can sort out that issue objectively. The future prospects of a company’s sub-industry, however, is an even more important issue and it will require a subjective assessment. You’ll have to do that yourself by learning to evaluate the “story” that supports each company’s stock price. That story emerges from the Business Plan and is carefully designed to hold up even if the company’s competitors prove to be more nimble. But it won’t hold up when a technological breakthrough makes the entire sub-industry obsolescent. For example, the energy industry will be transitioning away from “fossil” fuels because those produce greenhouse gases that pollute the air and heat the atmosphere. Caveat Emptor.

Bottom Line: Company research certainly helps an investor make fewer mistakes. But currently most companies are on a downward path. They’re caught up in “mission creep” that is paid for with an ever-increasing use of debt. Until the US tax code stops incentivizing managers to take that path, stock-pickers will have trouble beating broad-based index funds. Why? Because the Wilshire 5000 Index and The Vanguard Total Stock Market Index Fund (VTSMX) include “startups” and small or mid-cap companies that are unable to qualify for a long-term loan with an acceptable interest rate, meaning a rate that is less than the company’s rate of return on assets (ROA).

Remember that the only reason to be a stock-picker is to nail down a stream of retirement income that grows 2-4 times faster than inflation (see Column H in the Table). There are no mutual funds (or other asset classes) that can do that for you. But you’ll get rich faster by sticking to a low-cost, broad-based mutual fund like VTSMX. And, of course, hedge the volatility risk of that investment with a low-cost, corporate/government bond fund like the Vanguard Intermediate-Term Investment-Grade Fund (VFICX). The “B shares” of Berkshire Hathaway (BRK-B) are another low-cost way to access the kind of diversification without reliance on debt that makes sense to us here at ITR.

Risk Rating: 4

Full Disclosure: I dollar-average into WMT and NEE, and also own shares of HRL, ABT, CVX, XOM, and LECO.

Post questions and comments in the box below or send email to: irv.mcquarrie@InvestTuneRetire.com

Sunday, November 9

Week 175 - Gold, Apple and Your Inner Gambler

Situation: Why do many of us keep trying to make money on chancy investments like gold or zippy growth stocks? Because we think we're clever enough to make it work (even though few of us have a degree in finance or a job in financial services). I know you wouldn't be reading this blog if you didn't already know this is not a sound investment strategy but the temptation is still there. It’s the voice of our Inner Gambler. Why is that? Quite simply, we're competitive... all of us. Disposable income allows us to compete, whether in material terms or by positioning our children and grandchildren for success. Status carries with it a propensity to gamble for more status. An investor, however, measures success less by material proof and more by assets under management. An investor is unlikely to put money toward anything where the long-term Return On Invested Capital (ROIC) is unlikely to exceed the Weighted Average Cost of Capital (WACC) by at least 5%/yr. Therefore, long-term investment in life-enhancing events, such as educating one’s children, take top priority.

For today’s blog, we would like to examine how our Inner Gambler works, so as to gain power over it through situational awareness. In order to exist, gambling has to fulfill a need. But gambling differs from other addictions in a profound way: If successful, it enhances self-esteem and allows us to gain respect through the appearance of success and by helping others. In addition, we may be able to afford the trappings of self-importance and use those as a route to impressing other people.

Retirement is serious. And it’s becoming more serious with each passing year (and our government’s trillion-dollar addition to social safety net insolvency). With modern medicine, you may enjoy 40 years of retirement, if you’ve saved enough. The secret of retirement planning lies in distant gratification, not instant gratification. Most gamblers prefer instant gratification and allowing it to overcome their reasoning ability. We all know stressors arise from time to time and demand instant gratification. But we can also learn to “firewall” our key assets, such as the deed to our house, the title to our car, our wedding ring, and our retirement accounts.

Wait, how does one firewall a retirement account? You set up automatic monthly withdrawals from your checking account into your IRA and DRIPs, and divert at least 10% of your salary to your workplace retirement plan. It’s all on automatic pilot and you’d have to go to some trouble to stop those diversions, which would also result in a big tax bill.

More importantly, rules are needed that keep you from getting in a credit crisis: 1) Never buy stock with borrowed money (i.e., buying “on margin”); 2) Backup stock investments 1:1 with Treasuries unless you’re buying a "hedge" stock (see Week 150); 3) Create a budget that dedicates a piece of your monthly income to match each recurring monthly expense.

For this week's Table, we examine the two smartest gambles of the past decade: Apple stock (AAPL) and the iShares gold ETF (GLD). You'll want to know how these stack up against the lowest-cost and best-hedged mutual funds like Vanguard Wellesley Income Fund (VWINX) and Vanguard Balanced Index Fund (VBINX), as well as the lowest-cost S&P 500 Index fund, Vanguard’s 500 Index Fund (VFINX). Red highlights indicate underperformance relative to VBINX. For comparison, we include stocks that prosper in bad times: Wal-Mart Stores (WMT) and Ross Stores (ROST), as well as an intermediate-term US Treasury fund (VFITX) and a long-term US Treasury fund (PRULX). GLD did well during the Great Recession but the two recession-proof stocks did well then and have continued to do well. GLD predictably collapsed in price when the economy started recovering. Treasuries are the “steady Eddies” of finance and really shine during recessions, but fade during recoveries.

Let’s assume that you were clever and bought a lot of AAPL and GLD 10 yrs ago. But were you clever enough to sell GLD 5 yrs ago and buy VFINX just as the stock market was taking off? Or did you wait until the price of gold collapsed two years ago? And, would you have been clever enough to not sell your AAPL shares in 2012 when the price fell 20%, or in 2013 when the price fell 40%? Very few investors who bought GLD and/or AAPL 10 yrs ago would have known “when to hold and when to fold.” And, those few probably wouldn’t have acted. Why? Because that would have meant going against herd behavior. In summary, being clever is about making three smart moves (buy:hold:sell) in a timely manner, not just one, and making those moves regardless of the opinions that others may hold.

Bottom Line: In hindsight, even the best gambles carry too much emotional baggage and volatility to warrant a place in your retirement account. But Apple (AAPL) shares have been a great investment for those who studied the company carefully throughout its ups and downs and refused to sell. The problem: AAPL is so successful that naysayers abound, and they’re not just short-sellers. It is simply human nature to highlight negative factlets about successful people or enterprises.

Risk Rating: 8

Full Disclosure: I've never owned GLD or AAPL shares.


Post questions and comments in the box below or send email to: irv.mcquarrie@InvestTuneRetire.com

Sunday, November 2

Week 174 - Lifeboat Stocks for an Overpriced Market

Situation: The S&P 500 Index has been priced at or close to 20 times trailing earnings for several months now. That means equity yield is 5.0%, which is the bottom of its historic range  of 5-10%. However, 10-yr Treasury Notes are only yielding 2.5%. That means the equity premium is 2.5% (5.0% minus 2.5%), suggesting stocks are still a “buy.”

At these lofty valuations, what is prudent stock-buying behavior? I would say this is a time to maintain your current plan, and think about dollar-averaging any additional funds into either the Vanguard Wellesley Income Fund (if you’re a “Risk-Off” investor) or the Vanguard Balanced Index Fund (if you’re a “Risk-On” investor). Those funds are highlighted in the “BENCHMARKS” section of all our Tables. That being said, we know you’ll be tempted to place additional funds in “Lifeboat Stocks” during this uncertain period (see Week 151). But be careful. So many investors are going in that direction that such stocks have become a “crowded trade.”

For this week’s Table, we’ve listed all of the Dividend Achievers in the Barron’s 500 List that have an S&P bond rating of BBB+ or better and an S&P stock rating of A/M or better. Companies that don’t have a Finance Value (Column E Table) higher than that for VBINX are excluded. So are companies paying a dividend that amounts to more than ~50% of earnings (“payout ratio,” Column I Table), or ~60% in the case of a regulated public utility. 

Only 9 companies survive our screen, as of this date (9/24/14). Wal-Mart Stores (WMT), Johnson & Johnson (JNJ), and PepsiCo (PEP) are household names. CVS Caremark is familiar to many, but few know that it was recently renamed “CVS Health” because the stores stopped selling tobacco products. The JM Smucker Company is associated in the minds of most of us with jelly and jam but is actually the largest purveyor of coffee in the US, both at grocery stores (Folgers, Millstone) and along Main Street (Dunkin’ Donuts). Metrics that reflect underperformance vs. VBINX have been highlighted in red. In particular, note that 7 companies have red highlights in Column K of the Table (P/E). 

Bottom Line: You can still find “Lifeboat Stocks” that are worthwhile investments but it is time to tread lightly. For those stocks, stick to dollar-averaging small amounts of money into an online DRIP each month. Better yet, give Vanguard’s balanced mutual funds like VWINX and VBINX a closer look.

Risk Rating: 4

Full Disclosure: I dollar-average into NEE, ABT, and WMT each month.

Post questions and comments in the box below or send email to: irv.mcquarrie@InvestTuneRetire.com