8/18/2011 5:18 PM ET|
A dozen dividend stocks worth a look
Dividends provide a revenue stream that can pay investors while they wait for the stock market to rally. These 12 stocks have attractive yields.
If we learned one thing from the 2007-2008 stock market collapse, it is that investors who can keep a cool head and be opportunistic in their purchases can make tidy profits as stocks recover.
Koza, a civil engineer living near Sacramento, Calif., bought into financial services companies like Radian Group (RDN, news), Genworth Financial (GNW, news)and CIT Group (CIT, news)as investors panicked. His in-depth, homespun stock research and smart stock picking helped him score huge profits in 2009 and recoup a 40% loss in 2008. His 10-year average annual return is now an impressive 22%.
Wall Street's most-recent bloodbath also presents buying opportunities. One smart way to approach the carnage is to look for stocks that have relatively stable dividends. Dividends offer investors an opportunity to lock in high yields and collect payments as they wait for stocks to recover.
Of course, there is the risk that companies will eliminate their dividend if the economy worsens, though dividend-paying companies are loath to halt the payouts once they have initiated them.
Each of the stocks below has a relatively high dividend yield. The picks come from two sources: the website Dividend Channel and Bill Priest, the CEO and co-chief investment officer at Epoch Investment Partners. Priest is focused on finding sound companies with a long history of paying dividends.
1. Reynolds American: 6.1% yield.
Reynolds American (RAI, news)is a holding company for the nation's second-largest cigarette maker. It has five of the 10 best-selling brands in the United States, including Camel, Winston and Kool. The Winston-Salem, N.C., company also owns American Snuff, a maker of smokeless tobacco.
2. Coca-Cola: 2.8% yield.
3. Southern Copper: 7.4% yield.
4. Eli Lilly: 5.5% yield.
Eli Lilly (LLY, news)develops, manufactures and sells pharmaceuticals -- including antidepressant Prozac and osteoporosis treatment Evista -- that are sold in 140 countries. The Indianapolis company also manufactures animal health products.
5. H&R Block: 4.3% yield.
H&R Block (HRB, news)provides tax-return-preparation and tax-consulting services through more than 11,000 retail locations across the United States. In addition, it has locations in Canada and Australia. The Kansas City company also publishes do-it-yourself tax-preparation software and offers retail banking services through H&R Block Bank.
6. Leggett & Platt: 5.5% yield.
7. Lockheed Martin: Yield 4.2%.
Lockheed Martin (LMT, news)is a military contractor, with about 85% of its sales coming from the U.S. government. The Bethesda, Md., company provides aeronautics, surveillance systems, satellites and other products, as well as engineering and information services.
8. Paychex: 4.6% yield.
9. Pearson: 3.6% yield.
Pearson (PSO, news)is a publisher of newspapers, books and educational materials. The London company is the world's biggest textbook publisher. It owns the Financial Times daily newspaper and half of the weekly Economist magazine. Book brands include Penguin and Viking.
10. United Parcel Service: 3.2% yield.
11. STMicroelectronics: 5.9% yield.
12. Cinemark Holdings: 4.4% yield.
This article was reported by Matt Schifrin for Forbes.com.
VIDEO ON MSN MONEY
so if these stocks yield four percent per year on average, but have lost 16 percent of their value this year on average, how many years will it take you to break even with this strategy?
and are you telling me that we should park our money in a portfolio that has already lost 16 percent of value and a possible additional 16 or 25 percent loss is possible followed by a long period of recurring recession and stagflation? i get a strong feeling about your suggestion ....
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