2nd Stock

Buying Your Second Stock?

Last post we explored choice 2.  Let’s look at choice 1.  You buy your second boring stock.  You like the food stock you purchased as your first.  But don’t get tempted to buy a second stock in the food group.  We should diversify.  I would suggest a utility.  There are many utilities, you can pick your own or go with my suggestion.

Consolidated Edison Inc. (ED) is my first pick in the utilities.  I purchased it in March of 2008 for $40.50 a share.  It gave a 5% dividend return of .40 a share.  It has raised its dividend every year.  ED is now in a range of $57 to $60.50.  The dividend has gone up to .605 a share dividend.

You may say past performance is no guarantee of future performance and you are correct.  The history of Con Ed that I look at is a bit farther in the past.  During WWII New York City lobbied and gained the right to ignore the blackout rules and keep the lights on.  American ships were lost and sailors lost their lives as submarines sat outside the harbor using the city lights as a back drop to outline the ships, yet tourism in New York City took precedence over lost tonnage of shipping and American lives.  The tri-state area and California have an economy that is an engine of its own, not relying on the national economy.  The Orange County deregulation nuts got their way in California and there were rolling blackouts and Enron stole money from every person who lived in California.  New York regulators are not cut from the same cloth, and did not go nutty in the name of deregulation.  So my recommendation is based on historical outlook but a different history.

You should again sell a covered call at the same time as you purchase the stock.  Again dividend reinvestment is the way to go.  Get your broker to help you if you don’t know how to code it into the on line screen.  You now have 2 boring stocks.  The goal gets stocks you don’t have to worry about or time consuming to monitor.

You can pick your own utility if you like you don’t need to pick mine, or you can get the utility ETF in this case it has a dividend but I don’t think it has the same upside potential as ED.  You can get a natural gas utility if you would prefer. 

Next post I will recommend a third boring stock.  Unfortunately your third and fourth stocks will take a bit more to monitor.  Both will be in different industries so you will stay diversified.