Buy Companies That Offer Value, High Dividends

Dean Kartsonas, Federated Capital Appreciation Fund manager for Federated Investors, said his company's third-quarter investment strategy will focus on companies that offer value in a tough economy.

Wholesale retailers Kroger and Wal-Mart are a good choice, along with McDonald's and food manufacturer Unilever NV, he said.

Jeffrey Saut, chief investment strategist at Raymond James, agreed with Kartsonas' picks, adding Linn Energy, telecommunication group Alaska Communications and pharmaceutical company Schering Plough to the list because of their high dividend yields.

Regional banks may also make a comeback, Kartsonas said. Huntington Bank prereleased operating results that are still on track with what it forecast one month ago, and BBT raised its dividend one cent last week. These factors may help stabilize the industry, but investors shouldn't "jump in with both feet" just yet, he said.

To regain stablility in the market as a whole, investors just need to be patient, Kartsonas said.

"I think the market's going to have to grind through this, and hopefully going into 2009 [it will] start moving higher."


Disclosure information was not immediately available for Saut, Kartsonas or their companies.