This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

'Cash Cow' Investing: Finding Yield in 2012

Editor's note: As part of our partnership with Nightly Business Report, TheStreet's Gregg Greenberg joined NBR Monday (watch video here) to reveal where fund managers are looking for yield in 2012.

NEW YORK ( TheStreet) -- Just because the economy is growing does not mean investors should abandon high-paying dividend stocks in favor of growth names, says Oliver Pursche, co-portfolio manager of GMG Defensive Beta Fund (MPDAX).

"No one is saying you shouldn't own growth stocks. The point is that dividends are a key component of total return, so investing in high-quality, high dividend paying stocks that also have growth characteristics should do very well in 2012, just like it did in 2011," says Pursche.

The $20 million fund, which launched in August 2009, has dropped 3.4% over the past 12 months, ranking it in the 66th percentile of Morningstar's (MORN) multi-alternative investment category.

Pursche specifically points to McDonald's (MCD) as a company that fits his growth plus dividend criteria, as the fast-food purveyor continues to expand internationally without skimping on its dividend, now yielding 2.8%. The company's stock is up more than 35% in the past year, compared with domestically oriented Wendy's (WEN), for example, which is up only 2% and yields 1.5%. And Pursche sees more room for Mickey D's to grow in 2012 even with a slowing Europe.

"They are ramping up revenues, store sales and everything else a growth business needs to accelerate. So it's a great example of a company that's exhibiting all of the qualities of a great growth stocks but has high yields and a strong balance sheet to support it," says Pursche.

Another Dow stock that is one of Pursche's prime picks is chipmaker Intel (INTC), which soared 24% over the past year and is now yielding 3.3%. Not bad compared to competitors AMD (AMD) and Texas Instruments (TXN), which have fallen 38% and 8% over the same period.

Word on the Street

"Intel is best of breed. It has a very strong balance sheet, high credit quality, good growth prospects and an attractive yield over 3% so it's giving investors the best of both worlds," says Pursche.

In the energy sector, Pursche likes Royal Dutch Shell (RDS-A), which yields 4.6%, as an alternative to American-based oil majors Exxon Mobil (XOM) or Chevron (CVX), which yield 2.2% and 3% respectively.

"When you look at Royal Dutch's balance sheet and its business model, it's not much different than Exxon Mobil, however, since it's based in Europe, it's gotten beaten up a little more, so you are getting a lot more yield and you should take advantage of that as an investor," says Pursche.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,135.82 -36.86 -0.21%
S&P 500 1,991.05 -3.24 -0.16%
NASDAQ 4,522.9140 -4.7750 -0.11%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs