marTin fridson

Forbes/Fridson income securities investor

FoCus: Fixed-income securities such as bonds, preferreds and convertibles, as well as closed-end funds, dividendpaying stocks, master limited partnerships and real estate investment trusts

strategy: Fridson seeks high current income and preservation of principal, keeping in mind the tradeoff between yield and price volatility. “You can create a portfolio with a value that barely budges from month to month by owning 90-day Treasury bills, but the yield on them is currently less than 2.5%,” says Fridson, who mitigates interim swings in market value through diversification across different industries and asset classes. Preferreds are among Fridson’s favorite securities, largely because they fly under the radar of wall Street’s major institutions and offer frequent opportunities to buy mispriced assets at a discount. “There is relatively little published research on them, and a few large sellers can have a big impact on prices, so they can deviate significantly from their fundamental value, and individual investors can take advantage of these disparities,” says Fridson, adding that focusing on income is not incompatible with producing wealth over time. “Our research uncovers securities that are very out of favor, providing major price upside as well as hefty yields.”

Case study: last April, Fridson recommended the common stock of b&g Foods (BgS) at a yield of 7.8%. Shares of the packagedfood seller, based in Parsippany, New Jersey, had been under pressure because of higher-than-anticipated freight-transportation and warehouse costs, but Fridson reasoned that B&g could pass on these costs to consumers. He was further encouraged by an expanded stock buyback. The stock gained 22% through the end of 2018,. How can you create a portfolio that provides monthly predictable income regardless of what the market is doing? Find out at forbesmagazine.com/fixedincome