Q: I wondered what your opinion was for stocks like Coke, Abbott Labs and PG&E?
Darwyn, Davis CA
A: Coca Cola Co. is a great name and maintains superb market share. However, it has been on the slide since reaching an annual high of $40.67 on 8/03/2012. With a dividend yield of 2.7 percent and a staple like business, I wouldn't mind initiating new positions during market dips. Conversely, if you maintain a large concentration, it may be a good time to reduce your exposure incrementally. The price on 01/29/2013 was $37.42
Abbot Labs returned 18.9 percent to investors during 2012, excluding an average dividend yield of 1.7 percent per year. They reported their Q4 and full-year earnings results on January 23 with ongoing earnings per share of $5.07 for the year. They also issued a strong earnings outlook for 2013. Abbott launched numerous new products across its diversified businesses in 2012, positioning the company well for future growth. Key pipeline innovations include the launch of its Absorb™ bioresorbable vascular scaffold; as well as several new product and geographic expansion initiatives in established pharmaceuticals, diabetes care and vision care. This is a great company but be wary as their business can be volatile. The price of ABT as of 1:00 PM PST on 01/29/2013 was $33.33
PG&E currently has a dividend yield of 4.3 percent. There are cyclical times when owning utility stocks makes sense. In my opinion, although they may provide portfolio stability, there are more efficient ways to reduce risk and attain yield.
PG&E has had its fair share of volatility over the last few years, while most utility stocks like Duke Energy Corp. have shown significant recovery. Of utilities, PG&E is not one of my favorites. The price of PCG on 01/29/2013 was $42.12 The price of DUK was $67.98