With the strong gains the market has experienced over the past seven weeks from the December lows not every stock has participated. Some high paying dividend names have floundered but their yield still seems attractive. The 10 year yield hovers near the 2.6% area while the term structure on the long end is rather flat.
Stocks that pay a strong dividend yield should always be considered, getting paid to wait for a stock to start performing. In many cases, these stocks become 'accidental high-yielders', through some decision, earnings warning or changeover in management. There is always the concern that management will slice the dividend in order to retain more earnings, and that decision might dissuade big money from coming on board.
Find a list of names that have high yields. You need to do your homework investigating the company to see if their yield is sustainable. Do they have strong cash flow? Are they in a high risk business where an economic downturn could jeopardize the yield? If it's at risk, then you might want to pass.
However, a stock that gets thrown overboard can protect itself with a strong dividend payout. I have identified seven high quality companies that fit the bill for consideration. These are names that everyone knows, they have grown their dividend for years but the yield has now reached levels of attraction.
As of February 8th these stocks had yields above 4.6%:
Macy's (NYSE:M)
AT&T (NYSE:T).
Qualcomm (NASDAQ:QCOM).
Philip Morris (NYSE:PM)
Altria (NYSE:MO)
Exxon Mobil (NYSE:XOM).
IBM (NYSE:IBM)
For longer term investing the high dividend paying stocks are a way to go as they return cash to shareholders. It's not always about finding the next hot growth name. An investor needs to have balance in a portfolio, and high cash return is a great way to create another earnings stream or re-invest into more shares.