Question: What technology stocks would you recommend right now?
Answer:
- Cisco Systems Inc. (NASDAQ: CSCO)
- We feel it is inexpensive as it is trading for around $17.
- The company has nearly $8 a share in cash;
- $3 of that cash-per-share would pay off their debt, and
- Thus at $13 a share, we feel the company is worth more.
- The company has a sizeable market share in all their markets.
- Data usage is growing, so we feel the company is poised for growth.
- The stock pays a 1.4% dividend.
- We feel it is inexpensive as it is trading for around $17.
- Intel Corp. (NASDAQ: INTC)
- Intel is a mature growth company
- The stock pays a 3.2% dividend.
- Microsoft Corporation (NASDAQ: MSFT)
- Oracle Corporation (NASDAQ: ORCL)
- Apple Inc. (NASDAQ: AAPL)
- We would not buy at the current price, but deem it as a hold.
Question: Last year I convinced my daughter-in-law to move $38k from an IRA rollover to a Roth IRA account at Charles Schwab. She is 38-years-old and currently has the money sitting in a money market account. I don’t think she has enough money to go into individual stocks, and I don’t like mutual funds because they don’t pay dividends but once a year. Can you recommend any type of broad sector funds that pay dividends throughout the year?
Answer:
- Guggenheim Multi-Asset Income (NYSE: CVY)
- The exchange-traded fund has a universe of 125 to 150 securities, including United States-listed common stocks, American depositary receipts (ADRs) paying dividends, real estate investment trusts, master limited partnerships, closed-end funds and traditional preferred stocks;
- The ETF focuses across a wide variety of industries, and
- It pays dividends quarterly at 4.72% with an expense ratio of 0.65%.
- Wisdomtree Dividend Ex-Financials Fund (NYSE: DTN)
- Also an exchange-traded fund that focuses on high dividend-yielding stocks outside the financial sector;
- It consists primarily of large and mid-capitalization companies listed on the United States stock exchanges, and
- It currently pays a 3.17% dividend and has a low expense ratio of 0.38%.
- Franklin Utilities Fund (FRUAX)
- A mutual fund that focuses on undervalued utilities;
- It currently pays a 3.74% dividend and has an expense ratio of 0.63%, and
- However, utilities can suffer as interest rates rise, so an investor should be sure this fits into his overall financial strategy.
Question: I have mutual funds that pay dividends. The market has roller-coasted, as you know. I had gains on the way up that I paid taxes on. Then the value went down. When it came up again, I paid taxes a second time. Can I move money into a non tax deductible IRA (I’m above the limit). Then can I avoid paying taxes while it roller coasters?
Answer: We assume that the mutual fund dividends also include Capital Gain Dividends from sales within the mutual funds (in addition to regular/qualified dividends on the stocks/securities, etc. held in the funds).
- If you want to contribute the mutual funds to an IRA as your contribution…you can’t.
- IRA Contributions (Roth or Regular) must be made in cash (Internal Revenue Code Section 219(e)(1)).
- Exception: When property (securities, etc.) are rolled-over from a pension plan or IRA to another IRA, they maintain their character (i.e., cash, securities, property, etc.)
- You would have to:
- Sell the mutual funds first;
- Then contribute the cash to your IRA, thus being forced to pay tax on any gains that have accumulated up to this point, and
- Once inside the IRA, the cash could purchase mutual funds again (or anything else you might choose), and they would escape and further market fluctuations on their values.