What investment pros are buying today

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Dave Carpenter

A slumping stock market and economic difficulties make this a challenging time for investors looking for the best place to put their money.

No consensus emerged among the nearly 1,700 financial planners and fund managers attending the annual Morningstar Investment Conference. But many floated ideas for good buys and strategies in this difficult environment.

Several professionals offered up their single best investment ideas:

Dividend stocks. Procter & Gamble (PG) and Abbott Laboratories (ABT) as dividend stocks to hold for the long term. Both have yields of more than 3 percent. “Their stocks haven’t moved in years, but both their dividends and revenues are moving.” Both are businesses that are going to be around and still strong 15 years from now.

P&G’s rise in product sales is coming from emerging markets countries with good growth prospects. Abbott’s top-selling drug, Humira, which is used to treat inflammatory diseases like rheumatoid arthritis, is “not going to fall off the cliff,” and the company keeps finding new uses for it.

— Josh Peters, equity income strategist for Morningstar

Mutual funds. Large-cap funds in general, and Jensen J (JENSX) in particular. It’s a large-cap growth fund, rated five stars by Morningstar.

And for cash, use an online bank for the best CD rates. We’re moving a lot of customers into Ally Bank, where they can get 2.3 percent for a five-year CD.

— Ross Levin, founding principal of the financial planning firm Accredited
Inv
estors Inc. in Edina, Minn.

TIPS. Treasury Inflation-Protected Securities (TIPS), should be the bedrock of any investor’s portfolio to help provide a hedge against inflation. (TIPS are a type of Treasury bond whose payout is adjusted every six months for inflation.)

They are “badly overpriced” at the moment but still a good buy if you believe that inflation is going to be 4 to 5 percent over the next year.

— Robert Johnson, director of economic analysis for Morningstar.

MLPs. Master limited partnerships (MLPs) are a publicly traded version of limited partnerships, which enables them to avoid paying corporate income taxes. Most are oil and gas pipeline companies.

A master limited partnership called Energy Transfer Equity (ETE) has a 5 percent yield, and new pipelines coming on line enable it to achieve double-digit growth in the next couple of years.

— Paul Larson, equities strategist for Morningstar.

Large-cap U.S. stocks. High-quality, large-cap stocks are the only U.S. stocks worth buying right now. “We’re underweight [on] stocks in general, but only moderately, because [the returns on] cash and bonds stink, too.”

— Ben Inker, head of asset allocation at investment management firm GMO.

Growth stocks. Companies that are on track to double or triple their revenues in the next five or 10 years are good opportunities. “If you can wait for an opportunity today and buy them at a reasonable price, you can buy them and hold them and make a lot of money.”

— Morty Schaja, CEO and managing partner at Riverpark Funds, New York.

— AP