Drip Portfolio Report
Heading Home
by Dale Wettlaufer (DaleW@fool.com)


Alexandria, VA (July 7, 1998) --I think we're pretty well along in doing preliminary stuff and looking at examples of companies' financial models that we can head to the home stretch of looking at the final list of companies. I have the original list of suggestions that Drippers sent earlier this year and will select from that as well as the attractive companies that we've already examined. We'll also look at one or two others that we haven't done a full preliminary check on. Among those, Zions Bancorp (Nasdaq: ZION) will be in the group, as will Fannie Mae (NYSE: FNM). Bank of New York (NYSE: BK) is also an interesting candidate, but I'd just as soon go with State Street Corp. (NYSE: STT), which is what Bank of New York wants to be, anyway. As for Mellon Corp. (NYSE: MEL), big deal. It's a fine company, but I found their refusal to talk with Bank of New York really screwed up, especially because Mellon pulled the same tactics of CoreStates Financial that BONY used on Mellon.

Also on the list, First Tennessee National (Nasdaq: FTEN) must make it. It's an extremely well-run bank, kind of like a little Norwest (NYSE: NOB). Speaking of that, Norwest and Wells Fargo (NYSE: WFC) will get on board, because I'm a sucker for the way Norwest CEO Dick Kovacevich runs the company. What a great CEO. Also, I can't resist putting NationsBank (NYSE: NB) on the list. That and First Union (NYSE: FTU) were the focus of my banking piece in our 1997 Industry Focus (our best ideas for the year). While I think both Charlotte banks are well-run companies, I've got to give the edge to NationsBank. I think CEO Hugh McColl has been more progressive and more aggressive in following a strategy that will end up in the company being the largest consumer bank in the US, should its merger with BankAmerica (NYSE: BAC) be approved. Due to popular demand, Regions Financial (Nasdaq: RGBK) will make it. I am on the fence with Merrill Lynch (NYSE: MER) and am still debating on some consumer finance companies.

There is obviously a large-capitalization bias here. In my position of writing for a bunch of people that I don't know, I would rather go with well-established names and stay away from smaller companies. In my own investing, I own some banks that are much smaller than these and one of which is traded over the counter. That's my personal portfolio, though, and I'd rather stay away from making a small company the culmination of what we're doing here. I would say, though, that picking a well-run smaller company for a DRP portfolio is a good growth strategy.

More tomorrow on exactly where we're going.

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7/7 Close

Stock Close Change CPB $53 5/16 - 3/16 INTC $75 1/8 + 1 21/32 JNJ $74 9/16 + 2 3/16
Day Month Year History Drip 1.70% 0.91% 5.25% (10.37%) S&P 500 (0.23%) 1.84% 18.98% 21.37% Nasdaq (0.07%) 0.71% 21.51% 19.72% Last Rec'd Total # Security In At Current 06/30/98 3.017 CPB $54.259 $53.313 06/01/98 9.384 INTC $80.482 $75.125 06/09/98 5.535 JNJ $69.365 $74.563 Last Rec'd Total# Security In At Value Change 06/30/98 3.017 CPB $163.70 $160.84 ($2.86) 06/01/98 9.384 INTC $755.21 $704.94 ($50.27) 06/09/98 5.535 JNJ $383.94 $412.70 $28.77 Base: $1700.00 Cash: $346.06** Total: $1624.55

The Drip Portfolio has been divided into 68.021 shares with an average purchase price of $23.522 per share.

The portfolio began with $500 on July 28, 1997, adds $100 on the 1st of every month, and the goal is to have $150,000 in stock by August of the year 2017.

**Transactions in progress:

6/22/98: Sent $40 to buy more CPB, $35 to buy more JNJ, $25 to buy more INTC.