What's Missing in This Market

 | May 10, 2013 | 10:40 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

mrk

,

jnj

,

bac

,

clx

,

gsk

Now I know why I kept Merck (MRK) and why I didn't give up on Johnson & Johnson (JNJ). Because not every day is going to feature a huge commodity move, particularly when there is still tremendous commodity deflation.

You simply can't get away from the need for good yield in an era of commodity inflation, and these stocks give it to you.

Today is a day, by the way, where I realize what is really missing in this market: high-yielding bank stocks. There was a time when you would reach for a Bank of America (BAC) because it yielded a safe 4% to 5%, or maybe even go for a lesser-quality bank and pick up a little extra.

But we keep getting force fed into the same drugs and foods because despite the bountiful return from so many companies' bottom lines, it isn't like these companies can double their dividends routinely.

For example, I was acutely aware when I interviewed Clorox (CLX) CEO Don Knauss (the man who told Carl Icahn, "If you leave us alone, we will get you there") that the company has a board meeting this month where the dividend will be raised.

Let me ask you: If Clorox raises its dividend by 6% would it make a big difference to you? Not to me.

But if we aren't getting any rate increases any time soon, it will certainly make a difference to the big fixed-income boys who have given themselves carte blanche to buy stocks to pick up yield, and Clorox is about as safe as it gets -- unless rates tick upward by a hair. That's why something that's 4% to 5% is so much better, and we just don't have enough of them.

So, we circle back to the likes of Merck and GlaxoSmithKline (GSK) and we feel better than having to be all in the oils or the minerals -- and play on knowing the cushion is only ever so slight and not growing fast enough.

Columnist Conversations

YHOO is trading $40.81, down 3.0% with IV30™ down 16.1%. Alibaba is trading at $92.41 on the first day ...
This chart is in reference to today's article on VIPS. This is a new pullback to consider if it retriggers. ...
The bull channel that has been in place since the late July/early August lows is clearly broken. Two wee...
Alibaba (BABA) is dominating talk on CNBC and the trading floor today and having impacts on the overall market...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.