Where Can You Get 8% Income?

In a previous newsletter, I discussed preferred shares and offered to send a list of some issues yielding 8%. Here's an additional way we help our clients get income. We call it the Equity Income Portfolio.

We use high-dividend blue chip stocks from the Dow Jones Average, names such as AT&T, IBM, General Motors, DuPont, etc. We then follow a formula to rebalance these each year and maintain your portfolio of high dividend stocks. Each year, we take out 8% for your income.

Here are the results:

$100,000 invested 1/1/73 is now worth $863,459. Income withdrawn totals $785,419. Income in the first year was $8,325 and gradually increased to $75,083 in 1998. This system has been a fabulous method for obtaining a consistent income and growth of capital. If you are seeking a system to sustain income, this may be a good program for your portfolio.

To determine if this would be suitable, please check off on the coupon and we will schedule a time to meet with you.

The Dow 10 Strategy is documented in "Beating The Dow" by Michael O'Higgins. The strategy standard deviation over this period is 15.5 vs. 16.6 and 16.3 for the S&P 500 and the Dow Jones Industrial Average, respectively. The above chart represents a $100,000 hypothetical investment made in 1973 and held continuously for 26 years. The chart assumes that all dividends during the year are reinvested at the end of the year and does not reflect the impact of commissions (which may vary significantly from firm to firm), taxes (which vary from investor to investor) or expenses. If the strategy was burdened with an annual expense of 1%, total cash distributions would have been $672,880 and ending portfolio value $690,858. Past performance is not a guarantee of future results. In any given year, the strategy may show negative or positive performance.