Then there's Big Oil. "Energy remains a fertile sector for income investors," says Lloyd Glazer, managing partner of Mayflower Advisors in Boston, which manages $850 million. Once again, the top U.S. companies have risen a long way, and yields have been compressed. "The global companies offer better valuations and higher yields than the domestics," he says.
France's Total (TOT), Italy's Eni (ENI), Anglo-Dutch Royal Dutch Shell (RDS.A) and BP (BP) of the U.K. all boast yields above 4.5%. These stocks are exposed to the global energy market more than the troubled European economy, Glazer says.
You also can find good opportunities in other sectors. U.S. utility stocks have risen a long way, and Eaton Vance's Saryan says you may find better opportunities across the Atlantic. One example she cites: British-based National Grid (NGG), which also has significant operations in the northeastern U.S., yields 3.5%.
Among big consumer companies, McDonald's (MCD) -- whose stock has fallen recently due to sluggish sales growth and some rising capital expenditures -- yields 3.4%. Saryan thinks the stock is a reasonable value at these levels.
British supermarket giant Tesco (TSCDY), whose investors include Warren Buffett, stumbled earlier this year on domestic price competition. It yields just over 4%. Ron Chan, an analyst at the $240 million Appleseed Fund, says the stock is cheap and the firm's fundamentals are solid.
There are caveats, of course. Stocks aren't bonds. Dividends can be cut. Stock prices can be volatile. Dividends are likely to lose at least some of their tax benefits next year as the Bush-era tax cuts expire. And non-U.S. stocks involve some currency risk, although a falling euro also may help European corporate profits.
For investors who don't want to pick individual stocks, there are funds that focus on income stocks. The Vanguard Equity Income Fund (VEIPX) has a yield of 2.9% and it charges annual expenses of 0.31%. For non-U.S. companies, the iShares Dow Jones International Select Dividend Index (IDV) exchange-traded fund, with a 0.5% annual fee, yields 5.4%, but be warned: It holds a lot of financial stocks.
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