401 Advisor: Seeking stable value with a high yield (VZ, AALSK, WIN, TMRK)

*See important disclosures.

401 Advisor’s Covestor model Dividend and Income Plus was designed to provide a stable value with a high target yield of 8 percent. 401 Advisors makes sure to help the model evolve by updating its holdings when necessary. In their January 2011 investment report 401 Advisor states

As a result of our success in 2010 we will be revamping our holdings as we go into 2011. The strategy remains the same – it’s just a change in holdings. For 2010 the portfolio was powered by strong performance in the telecom sector. As an example, top holding Verizon Communications, Inc (VZ) is holding onto an approximate 20% gain this year including reinvested dividends, (as of 12/28/2010 using data from www.bigcharts.com). We think it may be wiser to look for a new sector, with better future opportunities. While we will continue to hold VZ, we are replacing ALSK and WIN in the portfolio.

At the time this post was written, VZ was still the model’s top holding and Alaska Communications Systems Group (NASDAQ: ALSK) and Windstream (NASDAQ: WIN) hadn’t yet been replaced. On February 5th, VZ’s dividend yield was 5.4 percent. As we recently reported, VZ’s stock price had a bump in January after they announced the purchase of Terremark Worldwide (NASDAQ: TMRK). At that time, VZ had risen from a January 26th closing price of $36.40 to $36.49. VZ has since slipped down to $36.31, after announcing a buyback plan for up to 100 million shares.

*Prices courtesy of Yahoo Finance.