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Dear Beginners and DRIPpers



July 22, 2010 – Comments (3) | RELATED TICKERS: MCD , ITT , AIT

For any beginner investors who may be reading this:

Fellow Fool TMFOperaRocks (aka: my friend Molly) has a great CAPS blog you can find here. Molly works in customer service here at the Fool, and on top of having one of the greatest laughs of all time (yup, even better than Janice on Friends), is a pretty smart cat. Since March, Molly has been chronicling her "adventures" as a beginning investor. Her progress so far is impressive.

She is learning different styles of investing, how to analyze and value a company and trying to learn about some of the great investors while developing her own style. When I discovered Molly was progressing nicely in her quest I reached out and introduced her to DRIP investing.

Be sure to check out her blog and follow along in her adventure - this investing stuff is accessible. Molly is proving that every day.

Manwhile in DRIPland...

So far, TMFPhila and I have written two articles for the revival of the Fool DRIP Portfolio that can be found here and here. In the most recent article I outlined six companies that (1) caught my eye as interesting and healthy, (2) might be off the radar of many investors and (3) offer DRIP plans and direct share purchase (DSP) plans.

The six companies on my list were:

Badger Meter (NYSE: BMI)


Lubrizol (NYSE: LZ)

McCormick (NYSE: MKK)

McGraw Hill (NYSE: MHP)

Total System Services (NYSE: TSS)

Feedback on these selections has been mixed in approval but great in quantity. In fact, I received an email from a reader saying that while LZ was a great company, the transfer agent that manages their DRIP has been awful to do business with, and that if I wanted to proceed with LZ as a DRIP portfolio candidate that I needed to include a very large "hassle factor." Her multi-year issues with the transfer agent have persisted. I can't ignore this type of firsthand experience and am likely to remove LZ from consideration and replace it with ITT Corporation (NYSE: ITT) or Applied Industrial (NYSE: AIT). I'm on the fence as to which would be a better replacement -- your comments would be appreciated.

To continue with the selection upheavel, McGraw Hill and the other bond ratings agencies announced they don't want their ratings used in public debt issuances. This high-stakes game of chicken that could change the game in this business. I'm not sure I want to get in the middle of this spat and am likely to replace MHP with McDonald's (NYSE: MCD).

Let me know what you think of swapping in ITT/AIT and MCD and ditching LZ and MHP. Keep your eye out for next weeks DRIP portfolio articles where Todd will make a lame attempt at pitching MSFT and I present IBM. It'll be a tech battle to the death.



3 Comments – Post Your Own

#1) On July 22, 2010 at 1:51 PM, guiron (39.05) wrote:

I think MCD looks far better long-term than MHP. I wouldn't want to touch any of the ratings agencies myself, and publishing isn't the best business to be in right now. MCD has a long history of dividend increases and has a lot of international exposure.

Not sure about LZ. I always go through my broker to handle DRIPs and never had any hassles, but maybe I'm just lucky - also, I never owned LZ. Haven't done any homework on AIT or ITT, so can't say much about them.

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#2) On July 22, 2010 at 1:58 PM, guiron (39.05) wrote:

BTW, I'd rather own IBM than MSFT. Ballmer doesn't seem to understand investors and sits on cash or wastes it on also-ran projects like Kin instead of increasing dividends. MSFT has languished for a decade, while the company has seen astronomical growth. I don't have a lot of faith that they're going to start increasing dividends enough to make a difference, or care for that matter. I like IBM better, particularly because they have a big role in cloud computing and have ditched their low-margin PC business. And they do understand that investors need yield on these blue chip large caps or they go elsewhere.

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#3) On July 22, 2010 at 6:39 PM, rd80 (95.06) wrote:

+1 for dumping MHP and picking up MCD

I'd also toss EMR into the mix as a possible replacement for LZ.

Disclosure - long MCD

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