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Income Investing

A Promising Start

By Roger S. Conrad, on Sep. 23, 2013

Since the Lifelong Income Portfolio launched on June 20, 2013, this basket of 10 stocks has generated an average total return of 4.9 percent–not a shabby result when you consider how out of favor dividend-paying stocks have been of late. As always, our focus remains on building sustainable wealth over the long term.

Top of the Charts

Much of this upside has come from the three undervalued resource producers that we added to the model Portfolio for their above-average yields, favorable valuations and potential price appreciation stemming from a rotation into cyclical sectors. Thus far, our investment thesis has panned out: BHP Billiton (ASX: BHP, NYSE: BHP), Freeport McMoRan Copper & Gold (NYSE: FCX) and Total (Paris: FP, NYSE: TOT) have been our biggest winners to date, generating an average total return of 17.5 percent.

Each of these companies reported second-quarter results that were in line with management’s projections and better than what most analysts had expected. Mining outfits BHP Billiton and Freeport McMoRan Copper & Gold continue to focus on cutting costs amid a challenging price environment for commodities and concerns about Chinese demand.

BHP Billiton received a bit of a boost from Australia’s recent elections, with the new governing coalition vowing to overturn a controversial tax on the mining industry and scale back levies related to carbon dioxide emissions.

Despite the recent run-up in the share prices of BHP Billiton and Freeport McMoRan Copper & Gold, investors shouldn’t expect any miracles when it comes to earnings growth in the near feature. Both companies have put the worst behind them but remain value plays for patient investors. 

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