A slew of reader mail recently has raised some excellent questions about investing in dividend-paying stocks, an intriguing new Japan fund, valuations in the auto sector and the latest thinking on the energy sector. Here, some feedback and advice:
Dividends for the Long Run
I am looking for a good dividend-paying stock fund. Any advice?
Thanks,Larry Bethel Wichita, Kan. Hi Larry, In my humble opinion, one of the best options to invest in dividends right now is a fairly new exchange-traded fund: the iShares Dow Jones Select Dividend Index Fund (DVY), which trades on the New York Stock Exchange under the symbol DVY. The ETF is a basket of 50 stocks picked for their long history of strong dividends and dividend growth. Among the biggest names are Altria (MO), General Motors (GM - Get Report), FPL (FPL) and Honeywell (HON - Get Report). The fund sports a dividend yield of about 2.1%. And the portfolio looks cheap relative to the broader market -- the P/E is about 13-14, compared with the S&P 500's 20. Plus, it's cheap in other ways -- the expense ratio is a mere 0.40%. If none of that grabs you, it's worth mentioning that Wharton professor and