What the experts say

Like the stock? Try the bond

Blue-chip companies’ bonds “sure aren’t steals” these days, but they do offer a potentially welcome source of reliable income, said Jeffrey Kosnett in Kiplinger’s Personal Finance. If you are an investor who relies on dividend payments from your stock holdings and worry about sudden dips in those payouts, consider developing a “double-barrel” approach to blue-chip investing: “Find several companies you understand and admire and are content to stick with through several market and economic cycles. Then buy the shares and the bonds.” You can be pretty confident you’ll receive the semi-annual interest payments on the bonds, even if a whole industry briefly goes south—and dividend payouts with it. Companies whose stocks and bond yields pair nicely right now include AT&T, Clorox, IBM, and Kraft Foods.

Banks bounce back

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A lot of bank stocks currently seem underpriced, said Pat Dorsey in Money. While bank shares suffered a recent hit when “fears of another slowdown emerged,” many banks are still “printing profits”: Wells Fargo, Bank of America, Citigroup, and JPMorgan Chase earned a combined $14 billion in the second quarter. The trick for investors is to identify banks that have shed bad debts but won’t be hurt by a general slowdown in lending. Wells Fargo seems to fit the bill: “Wells has always been a master” of cross-selling products to existing customers, and it has yet to fully tap a customer pool it acquired “when it bought Wachovia in late 2008.”

ETFs become bargains

A price war is making it cheaper than ever to invest in those odd hybrids known as exchange-traded funds, said Jason Zweig in The Wall Street Journal. While it’s always been inexpensive to put money into ETFs—mutual funds whose shares are traded like stocks—several large fund companies, including Fidelity Investments, Charles Schwab, and Vanguard, have recently slashed or eliminated ETF commissions and annual fees. “This is one race to the bottom most investors should welcome.” If you’re a “buy and hold,” saving on annual expenses is always the first concern. Still, don’t turn a blind eye to trading costs. Like stocks, an ETF share often can trade at prices above its indicated net asset value.