Holiday Portfolio: Resolving to Expand the Bottom Line

Every New Year brings resolutions and opportunities for renewal, and things are no different for the holiday portfolio. In the resolution department in 2006 we strive for an enlarged portfolio and a shrinking waist line. So, to help with the portfolio (I've never been much help in the diet department), I present to you the fifth edition of the Holiday Portfolio.

I began 2005 feeling relatively confident that the markets would provide opportunities, but uncertain as to the breadth of a market advance. While there were moments of grandeur for the markets in the past year, it was not easy making money. Many investors did better than 2005's iteration of the Holiday Portfolio, total return with dividends was close to 10%, and while that wasn't bad for a difficult year, I always want better.

The past year's focus on total return did pay dividends, so to speak, and those dividends helped in the performance category. While dividends again will be part of the Holiday Portfolio, I think 2006 could be a better year for the broader markets.

As a result, dividends aren't likely to be as essential to a solid portfolio return. Don't get me wrong. Dividends will be very important, but capital appreciation should provide better opportunities than over the past two years. That means not every stock I stick in this year's "fab five" has to pay dividends. Nonetheless, these stocks have to be solid companies that will be interesting to follow for the coming 12 months.

All Year Long

The concept of the Holiday Portfolio is simple. I select a group of five stocks that I think deserve watching over the next 12 months, and I follow them -- regardless of their performance -- throughout the year. I'll revisit the portfolio on each market holiday and, at times, make comments about the stocks in RealMoney's Columnist Conversation. The only way a stock is removed from the portfolio is if it merges with another company or ceases to trade on a major exchange.

Company/Ticker	Recent Price	Indicated Ann. Div.	Current Yield
Altria (MO:NYSE)	$75.05	$3.20	4.26%
Chesapeake Energy (CHK:NYSE)	31.77	$0.20	0.63%
Compass Bancshares (CBSS:Nasdaq)	48.18	$1.40	2.91%
Microsoft (MSFT:Nasdaq)	26.16	$0.36	1.38%
Pfizer (PFE:NYSE)	23.27	$0.96	4.13%
Average Yield			2.66%
Source: TSC Research, Company Reports