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Dear Mr. Berko:

Dear E.P.:

As I recall, you folks also used some of the proceeds from the sale of your farm and house to buy a home in Oklahoma City without a mortgage. Although home prices are really low in Florida, and they will continue to move lower in the next year, I think you are making a big mistake by moving to Miami, which many consider to be a Third World country. In Miami, fewer than 35 percent of the residents are U.S. citizens, and Spanish is the dominant language and culture. I suspect most Okies would be much more comfortable in a North Florida milieu, where real Americans live.

Anyhow, if you absolutely must invest that $26,000 today, I’ll suggest two interesting and attractive income and growth investments. However, I “feel” there is a moderate degree of probability that each of these recommendations could slide about 10 percent lower by spring. So, I recommend you just invest $13,000 of your proceeds now. Come late spring, when most of the hot air has left the commercial real estate bubble and the Obama aura begins to tarnish, I recommend you invest the remaining $13,000.

First, I’m a Pfizer (PFE-$16.73) fan, not just because the current $1.28 dividend yields 7.7 percent, but also for the following reasons:

1. Pfizer Inc. has a huge cache of 25 drugs in phase 3 trials, some of which have the potential to be blockbusters.

2. PFE’s finances are solid as oak, and long-term debt represents less than 10 percent of capital.

3. The company’s 29 percent net profit margin – Pfizer nets 29 cents on every dollar of sales — is good enough to make the Mafia envious.

4. Foreign business is so strong that by 2015 PFE could become the top pharmaceutical company in Russia, China, Brazil, Mexico and South Korea.

5. Lipitor, PFE’s $11 billion drug, has patent protection until late 2011. By then a number of phase 3 drugs should pick up the slack. Meanwhile, PFE has more than 228 active drug programs, spanning a dozen therapeutic specialties, plus a stem cell research center that should flourish under the Obama administration.

6. The company is sitting on $17 billion in cash.

7. According to the average estimate of 15 analysts, PFE is expected to earn $2.49 per share in 2009, which is up from $2.38 in 2008. The company also has increased its dividend for 28 consecutive years (since 1980), and the Street expects PFE to increase its dividend to $1.32 this year.

8. PFE is trading at an all-time low price-to-earnings ratio of 11, produces free cash flow of $3 per share, and management is working actively to reduce costs.

Though the stock has zero short-term excitement, many on Wall Street believe there’s little downside risk. They believe that all of the above plus a handsome and strong 7.7 percent dividend are excellent reasons to own this stock for income and long-term growth.

My second recommendation is General Electric Co. (GE-$12.77), which pays a $1.24 dividend and has an impressive 9.7 percent current yield. GE is kind of like the canary in a coal mine; because of its vast diversified array of businesses, GE is a barometer of the direction and status of the economy.

The Street expects GE to report 2008 earnings of $1.88 per share (down from an earlier $2 projection), which would be the first time since Theodore Roosevelt was president that the company reported lower earnings. Fourteen analysts estimated 2009 earnings at $1.41 per share, which would be the first time since the Civil War that the company posted lower earnings in back-to-back years. Still, I would buy this blue-chip beauty for the following reasons:

1. GE has about $18 billion in cold, hard cash.

2. Management has taken a blowtorch to costs, and today’s 9 percent net profit margins are expected to jump to 14.4 percent in the next two years.

3. Revenues are expected to grow to $194 billion in 2009, up from $187 billion in 2008.

4. GE’s price-to-earnings ratio is at a 20-year low; the stock trades at 11 times 2009 estimates. GE has increased its dividend every year since I bought the stock in 1968, though I suspect management will keep the dividend at the current $1.24 for 2009. Still, the rich yield gives long-term investors a solid downside cushion.

I don’t expect GE shares to move much this year, but I would be comfortable as a cat in a hat owning the stock at this price.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@comcast.net. © 2009 Creators Syndicate Inc.