Q. I would like your opinion of my shares of Equifax Inc., which I've owned for some time. - BF, via the Internet

A. As one of the three major credit bureaus, along with TransUnion and Experion, this company is tied to cyclical trends in the economy that dictate the demand for its services.

That's why greater lending confidence on the part of the nation's big banks would provide a boost to its core business of assessing creditworthiness. Equifax says it has seen some improvement in market conditions and expressed optimism about growth through year-end.

International business holds the greatest promise, since credit reporting is not yet as evolved outside the US. While the company operates in 15 countries and has had strong growth in Latin America this year, only one-fourth of overall revenues are currently derived from outside North America.

It is aggressively expanding into Russia, Brazil, India and other developing markets that offer growth opportunities - along with some currency and political risks.

Shares of Equifax are down four percent this year following last year's 17 percent gain. The 20 percent profit increase in the second quarter was attributed to a pick-up in business and introduction of new products.

With identity fraud a growing concern, Equifax has expanded its suite of products that offer defences against it through verification of names and Social Security numbers. Such automated real-time identity verification and authentication tools are used to detect suspicious activities and common schemes.

There is currently little government regulation of database management, though a move toward more strict laws in the future could conceivably alter the industry's operational procedures and add requirements or restrictions that affect profitability. Equifax is highly profitable, especially during strong economic periods, and has been reducing debt since its 2007 acquisition of the TALX employment verification firm.

The analyst consensus opinion on Equifax shares is currently "buy"m according to Thomson Reuters, consisting of two "strong buys", four "buys" and three "holds".

There is little price competition in the businesses the company is in and it would be nearly impossible for a new competitor to amass comparable databases. Customers for its credit information include financial institutions, corporations, government and individuals.

Equifax also provides risk and marketing information, human resources outsourcing services, and employment and income verification services. The VantageScore credit score product offered by TransUnion, Experion and Equifax competes with Fair Isaac's FICO score.

Earnings are expected to decline one percent this year and increase 10 percent next year. The five-year annualised earnings growth rate is projected to be 10 percent.

Q. I'm looking for a steady fund and wonder what you think of Vanguard Dividend Growth Fund. - PR, via the Internet

A. If you're seeking something steady, this large-cap, blue-chip fund invests in reliable companies paying a dividend.

It isn't enough to simply offer dividends, however, since high yield and quality don't necessarily go hand in hand. Each portfolio choice has a history of increasing its dividend and the wherewithal to keep on increasing it.

The $3.4 billion Vanguard Dividend Growth Fund is up 10 percent over the past 12 months to rank above the mid-point of large growth and income funds. Its three-year annualised decline of 3 percent places it in the top 5 percent of its peers.

"I like the strategy, low expense ratio and the fact that it has blue-chip holdings," said Dan Culloton, analyst with Morningstar Inc. in Chicago. "This is a core holding that could be complemented by a small-cap fund to fill things out."

Donald Kilbride has been portfolio manager since early 2006, following his role as backup manager on Vanguard Wellington for four years. This is the first fund he has managed on his own. He seeks financially sound industry leaders at reasonable prices that generate enough free cash flow to increase dividends.

As much as 10 percent of fund assets can be put in companies that don't pay dividends but have potential to do so in the future. Turnover is below average and the fund benefits from an extensive research staff.

"You might find the income this fund generates to be lower than the broad market," said Culloton.

"That's because it avoids stocks whose yield may be high only because the stock price dropped significantly or the company is distressed."

Consumer services, healthcare and consumer goods each represent around 15 percent of the portfolio, with other concentrations in energy and industrial materials. Largest holdings are Automatic Data Processing, Johnson & Johnson, IBM, United Parcel Service Inc., Cardinal Health Inc., ConocoPhillips, Ace Ltd., PepsiCo Inc., BG Group plc. and Procter & Gamble Co.

This "no-load" (no sales charge) fund requires a $3,000 minimum initial investment and has a low annual expense ratio of 0.38 percent.

Q. Please settle this. How do credit cards from stores stack up against bank cards? Does it ever pay to have a retailer's card? - AK, via the Internet

A. Store credit cards are sometimes used to help consumers establish or rebuild credit.

Approval tends to be easier than with a bank credit card, the credit line is more modest and the card is only good at one retailer. Sometimes the store gives a discount on your initial purchases or other perks in appreciation of your loyalty.

A bank credit card, on the other hand, will likely have higher spending limits, lower interest rates and can be used many places.

A bank card is likely to have an interest charge of around 15 percent, while store cards are more often in the upper teens or lower 20s.

"The disadvantage of a retailer's card is that the interest rates are high and rarely, if ever, negotiable—no matter how great your credit scores are," said Greg McBride, senior financial analyst with Bankrate.com in North Palm Beach, Florida. "Of course, with both types of cards you should always try not to carry a balance and incur interest charges."

Andrew Leckey answers questions only through the column. Address inquiries to Andrew Leckey, 555 N. Central Ave., Suite 302, Phoenix, Ariz. 85004-1248, or by e-mail at andrewinv@aol.com

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