Picking up Nickels

Wednesday, November 08, 2006

Are you defensive?

With any of your stock holdings, that is.

Michael Sivy of Money Magazine writes about holding defensive stocks to balance the growth investments in your portfolio (The ultimate defensive stock). I found the timing of this article to be interesting since stock traders like Jim Cramer have declared that now is the time to dump defensive consumer products stocks in favor of growth stocks (like technology) since fears of a recession have decreased of late.

Even more interesting, I happen to own what Sivy considers to be the ultimate defensive stock: Proctor & Gamble (PG).

I generally prefer to be an investor in mutual funds and not individual stocks, but I have to agree with Sivy on this one. The reasons for owning P&G stock make sense if you think about it:

  • Consumers will continue to buy toothpaste, shampoo and laundry detergent even during a recession
  • P&G is primed for steady sales growth
  • P&G currently pays a dividend of thirty-one cents per share, and has raised dividends for 50 consecutive years

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