Dear Mr. Berko: I have $48,400 to invest and want to get an 8 percent yield on a portfolio of dividend stocks. I want stocks that trade only on the New York Stock Exchange, and I don’t want cheap stocks, utility stocks, foreign stocks, closed-end fund stocks or ETF stocks. I don’t want stocks that sell tobacco, alcohol or weapons. And I want stocks that will increase their dividends and can increase their share price by at least 50 percent in three years. Please send me a research report on each of your recommendations. And send me your answers by land mail because I don’t trust the privacy of computer email and I don’t read the paper every day and might miss your answer. And don’t use my initials because I don’t want people to know my personal business and that I’m writing you.
— XX: Moline, Ill.
Dear XX: Wow … you take the cupcake! When I was in Moline, the city had a population of 43,000. So I’ll respect your wishes and won’t use your initials because I don’t want folks in Moiline to know that I’m writing you.
I hope you recognize that regular payment of an 8 percent dividend yield in this market isn’t even a guaranteed maybe. The following five issues are massively risky, even though they are recommended by respected analysts. And the probability that they will decline in value is greater than the probability they’ll rise in value. There is even a possibility, which is better than remote, that each of the following high-yielding issues will decline in price and trade below your cost basis 12 months hence. Before purchasing these issues, I recommend a visit to your psychiatrist. Get his permission in writing, in case the buying broker questions your sanity.
APOLLO GLOBAL MANAGEMENT’s (APO-$14.60) $1.40 dividend yields 8.5 percent. APO is a worldwide, institutional investment manager that provides services to endowment and sovereign wealth funds. APO launches hedge funds and mutual funds, manages real estate and private equity funds and invests in commodities, chemicals, corporate restructuring, carve-outs, distressed buy-outs and recapitalizations. Revenues may increase 50 percent in 2016 and earnings could grow 40 percent to $1.95. Hail Goldman Sachs for a copy of their buy report.
