Dear Mr. Berko: I have $100,000 to invest for income. I want at least 6 percent. At age 63, I don’t want to invest this $100,000 in dumb mutual funds or annuities from which my broker said I could withdraw money monthly and automatically. These products are very costly to buy and own. And I know that when investors take money from an annuity or a mutual fund, they’re often taking some of their principal. That’s stupid, and I’m not stupid. I want seven to 10 stocks, and I want them to be less risky than the Standard & Poor’s 500. I want this portfolio to pay me dividends every month, not just four times a year. I won’t take any money from principal, and I can afford to be mildly aggressive. I want your investment recommendations to include stocks that can appreciate by an average of 2 to 5 percent a year. I refuse to own bonds! And I want this portfolio to own stocks with good dividend payouts. I want to keep pace with inflation, and I must have your answers ASAP.
— K.S., Erie, Pa.
Dear K.S.: “I want, I want, I want” is too bratty for me. I’ll wager you are single, have few friends, are clinically depressed, hated your father, are an only child and have never been kissed.
The following $100,000 portfolio of 10 issues has a beta of 0.81, so it’s less volatile than the S&P 500, which has a beta of 1. The issues in this portfolio have a combined 6.28 percent current yield and will produce $6,288 in annual dividend income the first year and a bit more each successive year.
Five of the following 10 issues have long-term records of modest annual dividend growth. So each year, your income should grow by a little bit more than the year before. And in 10 years, your total income could grow from the current $6,200 to $7,800 annually, which is better than a poke in the nose with a fat fist. I also believe that the following issues can provide moderate principal growth — between minus 3 percent and plus 6 percent a year. So in 10 years, this $100,000 could grow to $125,000.
