Strong Dollar,Appreciation Recasts Investing Strategies

Chipmaker Qualcomm will buy back 15 billion in stock,10 billion of that over the next 12 months.It has 31.6 billion in cash on hand,and will increase its dividend by 14%.It is contemplating a debt issue plus use cash for the buyback.Shareholders have been pushing for this bigger return on investment.Along with this accelerated repurchase,the company has just announced some new chips that are going to be important to its business.*
General Motors will be executing a five billion dollar stock buyback in the near term.*
The soaring US dollar makes it the worst of times for big American companies with an overseas presence,said Larry Glazer of Mayflower Advisors.There's actually a shortage of stocks out there.You have to change your investment strategy.Ultimately,the strong dollar is a good thing,but a volatile currency is not a good thing.It is hurting the emerging markets.*
Small cap stocks,as well as domestically-oriented US companies and European stocks,which have not appreciated nearly as much as US issues in recent years,are being recommended in these conditions.Margins of the big multinationals are likely to be hit by the strong dollar.*
iShares Small Cap Core ETF (IJR),iShares S&P Europe 350 Index Fund (IEV),Qualcomm Inc (QCOM)

Hedge Fund Takes GM Stake

Hegde fund Hayman Capital Management has taken a stake in General Motors.You're starting to see them take market share back,said Hayman founder and managing partner Kyle Bass.With their new 2014-15 product line,they're gonna increase dividends and buy back stock.Given how cheap the stock is,we think it should be trading in line with Ford.When you look at the enterprise value,it's about 47 billion dolars.
A 100 basis point move takes eight points away from their pension liability.We think that could actually go down to 17 billion dollars.We just think from a catalyst-driven timing perspective,now is the time to invest in GM.
The new GM products will take North American sales back.You have them really working on all cylinders.Motor Trend gives it the New Product of the Year last year.We think it's incredibly cheap and it's gonna move much higher next year,Mr.Bass noted.*
The federal government has announced it has exited its stake in GM,as Mr.Bass predicted it would by the end of the year.The taxpayer lost 10 billion dollars on the bailout of the automaker.*
GM shares closed at 40.90 in Monday trading,up 1.82%.

What Investors Should Look For

It's getting very confusing,said Mohamed El-Erian,CEO and co-CIO of PIMCO.What you're having at the Fed fundamentally is,difficult decision-making in uncertainty and changing leadership.1.Not a really good feel for the economy 2.Trying to get the market focused on the journey,but the market is focused on the destination.Put on top of that the change in leadership.*
It's really important to act on what you know for sure.1.You know they can't hike rates;the economy just isn't strong enough.2.You don't know about tapering,and we're stuck in a low level growth equilibrium of 2%,and high unemployment with low inflation.We don't see the demand for the high liqiudity.The transmission mechanism is blocked.*
Look for the safest fixed income,the front end of the curve,up to five years.On the equity side,companies that will continue to take cash out and distribute through dividends and buybacks.*
Our assumption is,Congress will not create yet another self-manufactured crisis,Mr.El-Erian added.He is a long time associate of PIMCO founder Bill Gross,"the Bond King,"and formerly managed the Harvard endowment.

Advantage View:Best Dividend Sectors

In 2010,stocks with the lower yields fared best,says Pankaj Patel,Managing Director for Quantitative Strategy at Credit Suisse.This should reverse in 2011.
The formula is to combine high yield and low payout ratio.That means yields greater than 1.5% and payout ratios less than 50%.Sectors with such a good current profile include consumer staples,health care,industrials,materials and energy,in Mr.Patel's opinion.
A low payout ratio indicates a good prospect of a company continuing to pay a dividend for an extended period.
From its 450 offices,Credit Suisse provides Private Banking,Investment Banking and Asset Management around the clock worldwide to corporate,institutional and affluent individual clients.It is also a retail bank in Switzerland.
Credit Suisse(CS)

RiverFront Dividend Stock Suggestions

The market is reacting to a few reports.That's the way slow growth feels,says Doug Sandler of RiverFront Investment Group.We're actually getting better and better news underneath the surface.
Seek the selective quality now.Consistent dividend growth is more real than earnings.Dividend companies tend to be more stable.
Among these firms are McDonald's,American Express,Chevron and Lockheed Martin.
RiverFront Investment Group is located in Richmond,Virginia.Majority employee-owned,it provides asset management,investment advice and leading edge market insights by seasoned professionals.
McDonald's(MCD),American Express(AXP),Chevron(CVX),Lockheed Martin(LMT)

Intel and SanDisk Prospects

Intel is raising its dividend 15% to 0.18 a share.The semiconductor titan says it is on track for its best year ever,with strong cash flow.
Kim Caughey Forrest,an analyst at Fort Pitt Capital Group,notes that companies hate to cut their dividends.Intel knows they can sustain this,so the increase is a good bullish signal for this stock.
They also really like SanDisk.SanDisk has a big footprint in the tablet arena.
Both companies are where the consumer is:at the laptop or the mobile end.
SanDisk is the leading manufacturer of flash memory cards for imaging,computing,mobile and gaming devices.Intel has also been expanding into the cyber security and mobile realms recently.
Intel(INTC),SanDisk(SNDK)

Deutsche Bank Recommendations

We hit the trough in Q3 of 2009,says Binky Chada,Chief U.S. Equity Strategist at Deutsche Bank.A large mountain of cash has already built up on corporate balance sheets.For Deutsche Bank,the bottom line is:1.buybacks;2.capital expenditure;and 3.dividends.Almost all of the decline in S&P dividends is from the financials.Over the next few years,DB expects to see the financials pay out.They have the cash.It's very important for regulators to get their arms around the issue.
DB recommends a basket of 50 stocks that cuts across the sectors.They have buys on Rowan,Dupont,Genworth,Molson and Schwab.The arguments for the historical patterns are,if anything,strengthened,in Binky Chada's view.
As for the financials paying out,consider that,once the U.S. Treasury sells its shares of Citigroup,the firm will be free to reinstitute its dividend.The shares are to be sold quietly,over a number of months,so as not to disrupt the market.Citigroup has already repaid its government loan.