Stocks or Bonds – The Eternal Debate!: Bank of America Corp (BAC), Pfizer Inc. (PFE)

Is Bank of America likely to return 100% in 2013? Who knows, but I would guess that it has significant more upside potential than bonds which that are trading at more or less 30 year highs.

If you feel the banks are too unpredictable for you, have you considered Pfizer Inc. (NYSE:PFE)? With a healthy return of 14% in 2012, Pfizer might well offer considerably better risk adjusted returns and value for long term investors than bonds. With a PE of 11, Pfizer Inc. (NYSE:PFE) is by no means expensive and has a strong pipeline of reliable earnings to support its respectable 3.5% dividend. Pfizer also offers something that bonds do not – the potential for dramatic upside should PFE discover a new miracle drug. Should an event like this occur, stock price appreciation of twenty plus percent is not without precedent.

How about The Coca-Cola Company (NYSE:KO) Coke has proved itself to be an excellent manager of investor capital. With consistent and long term earnings growth and a very impressive return on equity of 27%, Coca-Cola has proved itself to be stellar investment performer. Add to this excellent capital management, a respectable dividend of 2.7%, from a payout ratio of 52%. Investing in KO could be argued offers investors a level of safety sought from bonds yet with greater yield as well as better upside growth potential.

Bank of America, Pfizer and Coca-Cola are major players in industries that are essential and thus very unlikely to become obsolete anytime soon. This adds a level of dependability to their earnings potential.

The article Stocks or Bonds – The Eternal Debate! originally appeared on Fool.com and is written by Jarrod Bailey.

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