Article by Investment U
Uunless you simply don’t invest in stocks, you should seriously consider piling up on some solid high-yield dividend stocks today.
As I glanced over financial headlines this week, I noticed that BusinessWeek reported BlackRock (NYSE: BLK) and Morgan Stanley (NYSE: MS) now favor corporate bonds.
Gregory Peters, chief cross-strategist at Morgan Stanley, said, “Corporate credit is the place to be. That’s what we’re telling investors.”
And BlackRock managing director, James Keenan, raved, “Corporates, even high-yield corporates, are in pretty good shape.”
I agree. Corporate bonds are attractive. And many do present a decent opportunity to make money. Ask Steve McDonald, who has been banging the table on bonds for years.
But the truth is, right now, there may be an even better alternative. And it doesn’t matter if you’re retired, looking to, or you’re a fifth-grader.
I’m talking about owning shares of quality dividend-paying companies.
You may have heard us talking about them lately here at Investment U. After all, Associate Investment Director Marc Lichtenfeld’s just released his “already-a-bestseller” Get Rich with Dividends: A Proven System for Earning Double-Digit Returns.
If you haven’t yet, go pick up a copy of this book. Because what’s going on with dividends could make them the safest, best way to earn income over the next 10 years and beyond.
A Unique Opportunity for Income Investors
Looking back on the past 10 years, it has certainly been a decade for the bondholder.
In fact, SmartMoney says, “Since 1962, top quality bonds in the U.S. have carried an average yield of 8%, while stocks have yielded an average of 3%.”
But we’re entering a new era today…
Now some companies are actually paying dividends well in excess of their own bond yields. Just see the chart below for some examples of high-yield dividend stocks:
Company (Ticker) | Bond Rating | Bond Yield | Bond Maturity | Dividend Yield |
| Chevron (CVX) | Aa1 | 1.9% | Mar. 2019 | 3.5% |
| Coca-Cola (KO) | Aa3 | 2.3% | Sep. 2021 | 2.6% |
| Intel (INTC) | A1 | 3.08% | Oct. 2012 | 3.3% |
| AT&T (T) | A2 | 4.73% | Feb. 2019 | 5.0% |
| Proctor & Gamble (PG) | Aa3 | 3.0% | May 2027 | 3.6% |
| United Parcel Service (UPS) | Aa3 | 2.1% | Jan. 2021 | 2.9% |
| Verizon (VZ) | A3 | 3.21% | Nov. 2021 | 4.5% |
| Philip Morris (PM) | A2 | 2.82% | Nov. 2021 | 3.4% |
| ConocoPhillips (COP) | A1 | 4.78% | Jan. 2020 | 4.9% |
[Note: Chart uses Moody’s ratings.]
It’s certainly not something you’ll see often. And it presents a very unique opportunity for income investors. Because, in addition, corporations are sitting on more cash than they ever have – $2 trillion total.
They’re using these reserves to buy back shares of their own companies and… increase dividend payouts.
For example, Merrill Lynch equity strategists recently reported dividend yields had their best performance in 2011 and continue to skyrocket in 2012.
And these increases are coming from some of the biggest corporations in the world. They’ve paid out dividends for decades and steadily increased their payments, as well. And when you reinvest these dividends, they’re as safe an investment as you can get.
Why? Because even if the price goes down, your reinvested dividends will simply buy more stock and therefore pump out even more dividends…
So unless you simply don’t invest in stocks, you should seriously consider piling up on some solid high-yield dividend stocks today. In 10 years, you’ll be happy you did.
Good Investing,
Mike
Article by Investment U
