Dear Mr. Berko:

I have $43,000 to invest in a growth and income portfolio. Could you provide me with the names of four issues that you like as growth and income stocks?

I’m a long-term investor and like to hold good stocks 10 years or so. This $43,000 comes from $16,000 in zero coupon bonds I bought years ago at a darn good yield. I would hope that the issues you recommend to me might do as well as the zeros I bought in 1994.

I intend to reinvest all the dividends and won’t need to touch any of this money for about 12 years.

W.S., St. Louis

Dear W.S.:

That was a mighty fine zero coupon bond investment you made in 1993. Consider the following:

K-Sea Transportation Partners L.P. (KSP-$28) has 33 barge tankers, 3 tankers and 18 tugboats to provide refined petroleum products, transportation and logistics services to the northeastern United States. KSP’s customers read like a list of “Who’s Who” in the oil business and includes BP, ChevronTexaco, Conoco-Phillips and ExxonMobile.

Most of KSP’s revenues derive from long-term contracts with these bright stars in the business. KSP became public in early January at $23.50. It has trailing 12 months earnings of $1.52, sales per share of $21.79, a book value of $10.23, cash flow of $5.55 per share and no debt.

This publicly traded limited partnership hasn’t declared a dividend yet but the suits on Wall Street believe it will come close to $1.50 a share and they expect that KSP will pay $2 in 2005. This is a cleanly run company that should continue to book higher revenues and earnings. Put this on your list of growth and income stocks.

Washington Mutual Inc. (WM-$44) is a huge financial services company with close to 3,000 consumer banking, commercial banking, consumer and personal finance and mortgage lending offices in the United States.   WM has an impressive dividend record of growing at better than 15 percent a year during the past decade. Many investment services and brokerages believe WM is cheap relative to its peers. While earnings for this year and 2005 may not exceed record earnings of $4.21 for 2003, the out years seem to hold impressive potential for continued principal and dividend growth.

The $1.68 dividend yields 3.8 percent and some investment services predict that the dividend could rise to $2.20 by 2006. WM has excellent management, superb demographics and a sterling reputation. Add this issue to your list of growth and income stocks.

Pfizer Inc. (PFE-$37.50) is a $45 billion revenue drug company with well-known products like Lipitor, Norvasc, Zoloft, Viagra, Diflucan, Celebrex, Zithromax and Bextra, just to mention a few that you see zing cross your television screen every evening. PFE’s Caduet, a one-pill combination of Lipitor and Norvasc for cholesterol reduction and high blood pressure, and its Spiriva drug that treats pulmonary disease, has enabled PFE to dominate the lucrative cardiovascular market.

PFE’s pipeline is richly stocked with early and midstage prospects some of which may be blockbuster drugs by 2007. PFE will spend $7 billion this year on research and development. Some suits believe that PFE’s dividend could grow to $1.05 a share in the next four years. PFE, which is trading at just under 18 times, expects 2004 earnings of $2.13 and looks like a bargain compared to many of its peers. Please include this issue in your growth and income portfolio.

Finally, Avery Dennison Corp. (AVY-$61.50) is a $5 billion revenue manufacturer of adhesives, labels, markers, fasteners, safety products, three-ring binders, imprinting equipment, business forms, glue sticks, stamp pads, binding supplies, compact disk labels, name badges, report covers and folders, dividers, etc.   Revenues, earnings and dividend of this company have grown impressively over the past decade. Many on the Street feel comfortable predicting that future growth may exceed past performance.

AVY only has $800 million in long-term debt and its $1.48 dividend, which has grown threefold in the past decade, is expected to come close to $2 a share in the next four years. In that time, the stock could run up to the low $90s. Include AVY in your growth and income portfolio too.

I, as well as many of my clients, own shares in each of these companies.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or e-mail him at malber@adelphia.net.