High Dividend-Yielding Stocks Can Reap Solid Returns for Cautious Investors

In April 2010 and March 2009 I highlighted some stocks that pay decent dividends, as an alternative to low yielding bank CDs and bonds. The market was up a nice 40% from March 2009 to April 2009. Throw in a 4 to 5% dividend and you were looking pretty good!

From April 2010 to today (December 2011), the market was fairly flat overall. While the Dow Jones Industrials were up 5.5%, the broader S&P 500 index was flat. Given the volatility of the market with the European debt crisis, ongoing U. S. economy concerns and other current events, investing in the stock market can make you sick to your stomach. But other low-risk investments like bank CDs yield practically nothing.

As an alternative, check out some of these high-yielding stocks. While there were a couple duds, overall these stocks were up nearly 6% over the last 18 months, beating the S&P 500. Plus, they paid investors between 4 and 5% in cold, hard cash! Here's an update.

  • Altria (Symbol: MO) Stock was $21 in April 2010 and is $29 today ($17 in March 2009). With a current yield of 5.6%, why not profit on someone else's vice (hopefully not yours...lung cancer will cost you plenty long-term).
  • BP plc (BP) BP was one of only 2 duds in this line-up but only because of the Gulf oil spill in May 2010. It is at $40 today, down from $60 in April 2010 (though slightly up from its March 2009 price). Its 4.1% current yield beats most any CD you'll find.
  • Aflac (AFL) Aflac's stock price droped from $57 to $40 over the last 18 months but is currently yielding a nice 4.1%. Looking back though, in March 2009 its price was a measly $15 per share, so overall it has made a nice comeback in a nasty economy for financial stocks (even those with cool spokesducks).
  • Eli Lilly (LLY) Lilly has grown from $37 to $41 over 18 months and yields a meaty 4.8%. It was $31 in March 2009.
  • GlaxoSmithKline (GSK) GSK has also grown in price, from $29 in March 2009 $39 in April 2010 to $45 today. With that growth, the yield has dropped  from 6.8% to 5.8% to today's 4.8% but I'd continue holding it.
  • Nicor is now AGL Resources (GAS)  and currently yields in the 4.5% range, vs 4.3% 18 months ago. Stock slightly down, from $44 in April 2010 to $40 today. Was just $29/share in March 2009.
  • Merck (MRK) Merck stock is flat vs April 2009 but ylelds 4.6% vs 4.1% before. Compare to Pfizer's (PFE) current 3.8% yield at $21 per share ($17 in April 2009).
  • H.J. Heinz (HNZ) Heinz's stock price is in ketchup mode as it grew from $33 in March 2009 to $46 in April 2010 to $53 today. Yielding 3.6% today. Consider buying it but don't put it on hot dogs.
  • Kraft Foods (KFT) Capitalizing on the eating masses yearning to be fat-free, Kraft has grown from $23 in March 2009 to $31 in April 2010 to $36 today. Yield has dropped a bit to 3.2% but that's not too cheesy. Or is it.
  • Coca-Cola (KO) A Coke and a Smile is the operating phrase as we've seen Coca-Cola grow from $41 to $55 to today's $67.  It was yielding 4% at $41 but at $67 the current yield is down to 2.8%. Pepsico (PEP) is currently yielding 3.2%. Hmm, might be time for the Pepsi Challenge.
  • AT&T (T) Even with the foiled attempt to buy T-Mobile, stock is up to $29 vs $26 in April 2010 and $24 in March 2009. Not the most exciting stock to own but with its 6% yield, who cares!
  • Verizon (VZ) One of my personal favorites, Verizon has grown from $30 in April 2010 to $39 today. I like holding a basket of large telecom stocks for their yields. VZ is currently paying 5.2%, which event with stock price run-up is quite nice.
  • Southern Co. (SO) Another personal fav, SO burst from $27 in March 2009 to $34 in April 2010 to $45 today. With this stock price growth, the yield has dropped from 6.3% to 5.2% to 4.2%, but I'm holding his stable stock in my portfolio.
  • Johnson & Johnson (JNJ) JNJ stock price is flat but continues to yield 3.8% at its current $64/share. I like to think about how much money I make each time I stick that Q-Tip in my ear.
  • Kimberly-Clark (KMB) Maker of Kleenex, Huggies and Depends at $46 yielded 5.3% in March 2009 vs 4.3% yield at $61/share in April 2010 compared to today's 3.9% at $71/share. I continue holding and pondering how it will feel to wear their products (e.g. Depends) in another 20 years.
  • Microsoft (MSFT) I hate most of their products for various reasons but like most the rest of us rely almost exclusive on them at work. While the stock has dropped a bit from $31 in April 2010 to $2 today, it yields a decent 3.1%. Not my top pick but something to consider in a balanced portfolio.
  • Bristol-Myers Squibb (BMY) This drug stock grew from $21 in March 2009 to $26 in April 2010 to $34 today while its yield has dropped from 6% to 4.9% to 4%. Still worth holding in my mind.
  • Procter & Gamble (PG) PG stock prices is fairly flat at $65 but its yield has grown from 2.8% in April 2010 to 3.2% today. It yielded 3.5% at $47 in March 2009.
  • iShares Investment Grade Corporate Bond ETF (LQD) invests in high yield corporate bonds and currently has a yield of 4.6% currently, not to mention its price grew from $98 in April 2010 to $113 today.
  • Exelon (EXC) yields 4.9% at its current price of $42. Everyone needs electricity, well almost everyone. Let's throw one more electric provider into the mix. Consider American Electric Power (AEP), which yields 4.7% at its $39 stock price.

Good luck with your investing and if you have thoughts/comments/questions of your own, feel free to add them here or contact me. There are just a very small sampling of the thousands of dividend paying stocks available, so make sure to do your own deep thinking, dart throwing and research :>