Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Mike, give us the names of some funds.
Mike Ozanian, senior editor: Small cap (search) stocks have outperformed big cap stocks two-to-one this year, but big cap stocks are the better value now because of earnings and dividends.
David Asman: Big Cap is short for bigger capital or big companies. It’s that simple.
Mike Ozanian: Legg Mason Value Trust (LMVTX) and Janus Growth and Income (JAGIX). These are long-term, top performers. They’re funds that have very low expense fees.
David Asman: Is there a load fee? Do you have to pay money to get in?
Mike Ozanian: None at all.
David Asman: So you just put your money in. What’s the minimum?
Mike Ozanian: $2500.
David Asman: So, if you have $2500, those are the two. Chana, what do you think of those?
Chana Schoenberger, staff writer: Well, it’s worth noting that you can get almost the exact same returns if you just track the S&P 500 via Spyders (SPY), the S&P depository receipts. That’s an exchange-traded fund.
Bob Lenzner, national editor: Yeah, but by buying the Legg Mason Fund, which he is talking about, you get one of the greatest money managers in America.
David Asman: All right, Bob. Let’s go to you. You have another fund to talk about.
Bob Lenzner: I recommend Capital Income Builder (CAIBX), because since the tax bill was passed 171 companies have raised their dividend, like Wells Fargo (WFC) and Citigroup (C).
David Asman: Because you are not paying as much tax on the dividends that you receive from the company.
Bob Lenzner: Right. Here is a fund that has produced a 10 percent return every year, on the average, since 1987. Half of the return comes in the form of the dividends, they buy stocks where they think they can increase their dividends at least 10 percent every year. On the average you’ve gotten 5 percent capital appreciation. It’s a prudent, steady return of 10 percent a year, better than the market, and you’re not taking a big risk.
Mike Ozanian: I like it because, you know, I’m not a big believer in tech stocks right now, and I think we’re going to go back to the traditional value investing of dividends. I think that’s big, and I think this is a good place to be.
David Asman: Well, Chana Schoenberger, let’s move to you, now you’ve got a very specific stock in mind.
Chana Schoenberger: Yeah, I want to talk about Gillette (G). Now Gillette has had Warren Buffett on its board for many years.
David Asman: Gillette, the shaving company.