3 safe income plays

These well-known blue chips are still paying sweet dividends.

By InvestorPlace Jun 22, 2010 9:30AM

Save Money © CorbisGreat dividend stocks are easier to find than you think.


Income investors looking for safe dividend stocks in which to stash their retirement money are already familiar with many blue chips that have hefty yields. It's just that when investors stop at the grocery store or pay their phone bills, they aren't thinking about how the big brands they're doing business with are actually good income investments.


Here are three of America's best-known corporations with yields about twice what 10-year Treasurys pay. These low-risk blue chips are some of the most famous high-yield dividend stocks out there:


1. Verizon (VZ) has a yield of 6.5%. It may end up selling the iPhone, but investors are facing the chance that some of the company's cash will go to pay a special dividend to its wireless partner Vodafone. Its FiOS home TV and broadband base is not growing as fast as analysts would like, but it gives this stock an extra layer of potential. This high-yield dividend stock could wind up a good value play based on its current PE ratio of about 12 -- and its good income stream is the icing on the cake.


2. Altria (MO) is the domestic half of the old Philip Morris, the marketer of Marlboro. The company has a 7% yield. The number of smokers is falling. There is a temptation for states to raise tobacco taxes to increase income eroded by the recession, and the federal government is increasing its regulation of the industry. But on the plus side, there are very few tobacco companies in the U.S., so Altria has little competition. Altria is still a cash machine, and is a strong dividend stock.


3. Eli Lilly (LLY) is one of the large pharmaceutical companies in the U.S. It has a 5.7% dividend yield. Big-pharma stocks are under pressure as their drugs go off-patent and face generic competition. The R&D to replace those drugs can cost billions, so Lilly may need a good chunk of change to keep its business running. However, this dividend investment fallback has shown no sign of slashing its payout anytime soon. That gives you a great reason to trust in Eli Lilly. LLY could also wind up being a good value play based on its current PE ratio of less than 9.


For a complete list of seven famous blue chips that are also high-yield dividend stocks, follow the link.


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