Alternative To Muni Bonds

This caught my eye this morning, though it’s no surprise to me: Lots of reasons to worry about muni bonds right now …by Nilus Mattive.

Millions of dollars are flowing into munis, primarily for the tax free income, I suspect. However, Obama would like to eliminate or tax this income making them less attractive. In addition, the author points out multiple cases where municipalities and states are in deep financial trouble. He concludes by saying, “Meanwhile, dividend stocks are supported by private companies sitting on record levels of cash. And if anything, the future tax concerns about dividends are being OVERSTATED.”

We know that Gold has risen for 12 straight years and the trend shows no sign of ending. So I thought about “dividend paying Gold stocks.” Buyupside put together a portfolio of dividend paying Gold and Silver stocks and the results are very attractive. It shows a 17.1% annual return since January , 2002. The portfolio has a Sharpe Ratio of .84 with 1.00 the highest. The higher ratio is preferable because it exposed the investor to less volatile historical returns, which implies less risk.

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