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By Jason Stipp | 11-25-2011 06:00 AM

Black Friday Picks for Your Investment Shopping Cart

Investors should steer their carts down the dividend, international, and muni aisles, says Morningstar's Christine Benz.

Jason Stipp: I am Jason Stipp for Morningstar, and welcome to the Friday Five.
It's Black Friday, and in the spirit of this famous shopping day, Morningstar director of personal finance Christine Benz has five items for your investment shopping cart.

She's here with me to offer the details on those.

Thanks for joining me Christine.

Christine Benz: Jason, Happy Black Friday.

Stipp: Thank you. So, five things for your investment shopping cart. The first one should be something of great interest to all the dividend fans among our viewers, and we know there are a lot of them. What's idea number one?

Benz: Well, there are two funds actually that I would bring to you, Jason. One is Vanguard Dividend Growth VDIGX; this is a fund that focuses on companies that have raised their dividends year-after-year. And the other counterpart to that would be Vanguard Dividend Appreciation, which you can buy either in index fund VDAIX or exchange-traded fund VIG format.

The reason I flag these right now is that I run these screens almost every week and look for specific attributes, and it seems that almost whatever screen I create, whether I'm looking for high-quality dividend-paying funds or looking for funds that have recently earned our gold rating from our analyst team, or looking for funds with a high percentage of wide moat [stocks], these funds always come to the top. So, I think, that they really look good from a number of angles right now.

One thing I would anchor this recommendation in is that our analysts--our equity analysts--think that the large caps look relatively cheap, as they have for some time, and these funds focus on large caps, and they also focus on companies that our analysts think have wide moats.

So, I think a number of things to like, as well as with them being Vanguard funds , they are all very low cost.

Stipp: So, certainly hitting on a number of very attractive cylinders there.

The second one, Christine, will be taking our cart down an aisle that a lot of investors probably don't really want to go down right now, and that's in the international space. Why should investors be looking at these international investments right now?

Benz: Well, we're closing in on year-end; this is the time of year when a lot of investors rebalance their portfolios. The idea is that you're sending money to your laggards and stripping back on your [winners]. I think if any of us are looking at our portfolios right about now, chances are we are seeing our international-stock funds and international stock holdings depressed overall. That's probably an area you'd want to add to in the spirit of looking at the lowest valuation securities in your portfolio.

International funds right now that we like a lot … we recently came out with our new Analyst Ratings, and I did a quick screen for some of the gold-rated international funds. Oakmark International OAKIX is one of our longtime favorites, Dodge & Cox International DODFX, and Harbor International HAINX--those are three I would name.

One thing I like about them, Jason, is that they focus the lion's share of their assets on developed-markets securities, but they have historically gone into emerging markets. I think if, at some point, we continue to see emerging markets sell off, they could get very cheap and could be very attractive to some of these valuation-conscious funds.

Stipp: So, some very good managers there. We know that there are some trouble spots globally, but that can also create opportunities for these really skilled managers to go in and make some bets.

On the individual stock side, Christine, did you see if there were any individual international stocks that investors might want to consider?

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