Investing Wisely

It's both the name of a hit song and a good description of investors still smarting from the recent implosion in their retirement accounts:

"Once bitten, twice shy."

However, at least one Little Neck-based financial advisor still thinks it's a good idea for investors 55 and older to get back into the stock market saddle — albeit, cautiously and with an eye on a steady stream of investment income.

According to Rosilyn Overton, a certified financial planner at the Little Neck branch of Mid-Atlantic Securities, older investors should consider buying tried-and-true stocks with comparatively-high dividends.

"Dividend-paying stocks are taxed at a much lower rate," Overton said. "Also the dividend will serve to protect the investor from any downward movement in the markets."

Overton added that stocks paying dividends even as low as 2.5 percent might be a good counterweight for investors with underperforming Certificates of Deposit (CDs).

Examples of dividend-paying stocks abound in the telecommunications, energy, commercial real estate and retail sectors, including Verizon (NYSE:VZ) at approximately 4 percent, Royal Dutch Shell (NYSE:RDS.A) at 4.3 percent and Target (NYSE:TGT) at 1.8 percent.

As an additional carrot for those looking to rebuild lost investment portfolio value, many dividend-paying stocks have a good chance of gaining market value in the short term. 

For example, low-cost retailer Target, currently trading near the end of Tuesday's session at $53-$54, has a mean target price of $62 — a potential 15 percent increase in value.

For those Little Neck residents looking for a bit of stability in what promises to continue to be a volatile market, dividend-paying stocks in energy, retail and commercial real estate might be a (safer) harbor, according to Overton.

"Even if there isn't an upside in the stock price, they'll still get a dividend," Overton said.

Paul Leonard, a former business journalist, is local editor of Little Neck Patch. His column focusing on issues important to local homeowners, investors and consumers, Just Business, appears every Tuesday afternoon.