Dear Mr. Berko:
On Sept. 21, the Wall Street Journal said the “recession ended in June of 2009.” So why do you still tell us that we’re in a recession? And economists at the National Bureau of Economic Research plus the president’s Council of Economic Advisers report gains in housing starts, corporate earnings, employment, corporate and bank balance sheets, consumer spending, retail sales, higher savings rates and on and on. I respect your opinions, but you’re wrong and should correct yourself. Now that I’ve said my piece, I have $12,000 and would like to buy three utilities that have good dividend growth potential. Our Oppenheimer broker wants us to buy a mutual fund, which doesn’t appeal to us. So we would be grateful if you would recommend several good dividend growth utilities for income plus growth.
T.O., Aurora, Ill.
Dear T.O.:
My dad used to say that we are never too old to learn something stupid. The WJS didn’t say the slump was over; rather, it quoted “a ship of fools” (National Bureau of Economic Research) who said the slump is over. In my opinion, the NBER is a warren of dizzy, ditzy academics who can’t earn a living in the real world so they teach economics to college students. The blind leading the blind! Son of a biscuit, no wonder that the economy is in such a stink.
This doesn’t speak well for economists in the private sector, either. And it’s because of these cloud-brain fools that the economy is in a mess.
In the past two years, the recession wiped out 8 million jobs, cut 4.2 percent from economic output and cost Americans more than 22 percent of their net worth. So the recession is not over until those 8 million Americans are back to work, the GDP recovers the 4.2 percent it lost and Americans have recovered the 22 percent of net worth they lost in their homes and pension plans.
The “slumping” might be over, but that doesn’t mean the good times are coming back. Weeks ago, FedEx canned 1,700 workers; Cessna cut 721 employees; Abbott Labs laid off 3,000 people; the Connecticut tribal casinos pink-slipped 475 people; Harrisburg, Pa., and Bristol-Meyers reduced their work forces by 700, and I can go on till the cows come home.
Yes, corporate earnings look good because Corporate America is generating more income with fewer employees. The GDP has improved from its trough of last year because of billions of dollars of economic stimuli. Housing starts and employment have edged a tad higher, but good news in one week does not a year make.
But the stock market is telling us another story. I sure hope the market is right and I’m wrong. And don’t mistake an improving stock market for an uptick in consumer confidence. Rather, it’s a confluence of Wall Street traders who determine where the market will finish at the close. Still, there is no such thing as a jobless recovery ... that’s like riding a unicycle uphill with one pedal.
Meanwhile, Avista (AVA-$20.80) serves parts of Washington, Idaho and Oregon, pays a $1.00 dividend that yields 4.8 percent and may pay $1.09 in 2011. AVA should grow its dividend some 10 percent annually in the coming three to five years. NextEra Energy (NEE-$53.70), formerly Florida Power (NEE paid a PR firm $2.3 million to make up that idiotic name), sells power to eastern and southern Florida. The current $2.00 dividend yields 3.7 percent, and NEE could grow this dividend 5 percent to 7 percent over the coming years.
Entergy (ETR-$73.37) serves Arkansas, Texas and Louisiana. Its $3.30 dividend yields 4.5 percent, which should grow 7 percent annually in the next five years.
Put $4,000 in each, reinvest the dividends and, for goodness sake, don’t use Oppenheimer where the commissions will cost you a kidney and a pancreas. Call Charlie Schwab. The charges for the whole shebang will be about $28.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate Web site at www.creators.com.
© 2010 Creators Syndicate Inc.
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