Next stocks to buy

[Sev]

Hi, nice to meet you guys in text form after lurking for the better part of a year.

As I am nearing completion of my two HY dividend stocks, so I am looking to add a DG stock as a third one. As I am quite young still I am looking for a more risky venture than Coke or the likes.

Do you have any suggestions where to put the next 2,5k in a DG stock with a higher risk and possible higher return? I haven't come across a stock that piqued my interest.

As info: The two other stocks I have so far are AAR and CRF, and yes I am aware of their risk. ^^

Thanks!

[Dividend Watcher]

Welcome, Sev. Glad you finally posted here.

I think you're out of my league. I just don't understand the mindset you seem to have any more even though I tried such things when I was younger also. I traded in and out of AST Research in the early 80s about 10 times and did pretty well but it made my stomach churn.

Tried to think of something to fit what you're asking but ended up feeling like this guy:

   

The only thing I can think of is Mattell (MAT) right now. Yield is over 4%, they just took a big drop because the holiday season was a bust. P/E around 14 and their prospects are a little dim over the long term. There's still an operating company there that could turn the company around if they came up with some popular products or people start buying Barbies again. They're not on the verge of bankruptcy. Dividend growth record not that bad over the last 10 years but it hasn't been the "steady eddie" us old geezers are more interested in.

Oh wait, you may want to look at Meredith Corp. (MDP) also. A publishing company of women's magazines but has much more than that. They have several pretty good online brands -- recipes.com, Good Morning With Rachel Ray -- and some broadcast companies along with an integrating marketing company that works with large businesses to build brand. I'd wait until the trailing P/E was in the low teens before buying.

I'd still seriously recommend thinking about KO at 3.2% yield. If you held that for the next 30 years, you could be very well off, IMO.

Anywhooooo, good luck. Stop in again and tell us more about yourself in the Introductions section.

P.S. Couldn't find AAR anywhere by symbol. Do you mean symbol AIR?

[Kerim]

Welcome Sev -- glad to have you here! I second DW's suggestion to tell us a bit more about yourself. It may improve the quality of our advice!

Youth and risk are a tricky question. It seems to be conventional wisdom that younger people can afford to take on more risk on the premise that they have more time to recover if things go badly. But it has always struck me that if you start young enough and have lots of time on your side, you don't need to take on as much risk -- compounding should get you where you want to go without as much risk of major losses when you're young that are tough to come back from.

So I guess I also think you should think again about making your next buy something "boring."

But, if you are set on higher returns with this next purchase, how about some of the DG-ish REITs, like O, ARCP, or OHI?

Or if you really want to take a chance, swing for the fences with NLY -- very high yield and some think ready to bounce back from the recent downdraft in the share price. Of course this is not a DG stock anymore...

Best of luck, and please do stock around and let us know what you decide!