Equity Residential, Eli Lilly Offer Value Plus Yield, Says Eaton Vance Portfolio Manager

Portfolio Manager Edward Perkin is a big fan of Equity Residential, Sam Zell's apartment REIT.
By Gregg Greenberg ,

Be defensive and don't be afraid of interest rate risk, said Edward Perkin, portfolio manager for the Eaton Vance Focused Value Opportunities Fund (EIFVX) - Get Report .

"Now that we've had this recent rally, I think it's back to being defensive and a little bit cautious and favoring higher quality stocks," said Perkin. "Many of those high quality names are dividend payers, which people worry about owning with the Fed likely to raise rates soon, but we are not afraid of that."

The Eaton Vance Focused Value Opportunities Fund is up almost 1% so far in 2015, according to fund-tracker Morningstar. The fund, which Perkin described as contrarian, has outperformed 86% of its peers in Morningstar's large cap value category.

Perkin is extremely bullish on Equity Residential (EQR) - Get Report , which is up 9% year-to-date and yields 3.1%. He said Sam Zell's apartment REIT has exposure to the markets with the best supply/demand outlook. The company recently divested non-core assets and will be paying a special dividend early next year.

"It says a lot about the quality of the capital allocation of this company that they are willing to divest these properties and pay that dividend," said Perkin.

He is also bullish on Next Era Energy (NEE) - Get Report , down 6% this year, saying the Florida utility's stock will more than withstand the impact of a Federal Reserve interest rate hike.

"We don't mind owning utilities when everybody else hates them," said Perkin. "You get a better than 3% dividend yield from Next Era and they are the largest player in wind so they are well exposed to the green energy revolution."

Finally, Perkin is a fan of Eli Lilly (LLY) - Get Report , up 19% thus far in 2015, because of its innovation in diabetes drugs, as well as its pipeline for Alzheimers treatments.

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