Well here we are again experiencing another significant loss in the stock market. Each time is different, but each time is an opportunity for savvy, long-term investors to buy low and earn above average returns. The current market is different as money market yields are essentially zero and to earn a return in a bond or CD above 2% requires you to lock up your money for 5 or more years or longer. And remember that bonds and CDs contain significant market risk if rates begin to rise. Gold has seen an unprecedented run and is now approaching $2,000 an ounce. I have been a bear on gold and I’ll admit I have been wrong but I caution anyone putting new money in gold of the huge risks you are taking. Don’t be sucked in by the hype.
So what do I like? Large, well-capitalized U.S. companies that have a long track
record of proven performance, a high dividend yield, and a history of increasing their dividends. Here is a list of stocks that I personally own and have a dividend yield of at least 3.60%:
- American Electric Power
- Campbell Soup
- Intel (now yielding 4.38%)
- Johnson & Johnson
- Kimberly Clark
- Eli Lilly
- Portland General Electric
- Verizon (now yielding 5.62%).
There are many other similar companies as well. but these are my favorites. Certainly any of these could continue to decline in value. But at some point the dividend yields will get so high relative to bonds and CDs investors will likely return to owning stocks such as these. For investors with a longer term view I believe owning some high quality dividend stocks will provide a nice total return.
Before investing in any of these suggestions please consult your investment and tax advisors to see if this is appropriate for you.