Dividends

Dividends, dividends, and more dividends

With the continuing uncertainty in the global economy, and thus the stock markets, its been hard to commit to individual stocks. Furthermore, all the analysts say the index's have had their run and you need to find individual winners in 2010.

What's a part-time investor to do?

If you look at some of the stocks with the most stable charts, you may notice they also have nice dividends…. Dividend investing is back, more people are in for the long-haul. More people are looking for steady income streams. More people are content to take a 3% - 4% dividend than to chase after a 20% stock return.

The reason is simple, the banks are paying below 1%, the treasuries are at 0, and corporate bonds don’t feel so safe these days.

Where does this leave income investors, just dividend stocks. Where do people looking to put a little 'skin in play' go to beat the rates at the bank….

A stock like MO has been +4% for the year and relatively stable. The DOW is pretty much even for the year. MCD is a relatively flat +2% for the year, plus the first dividend payment from its nearly 4% yield. Even a stock like GE, which has suffered an enormous beat-down is up 6.5% for the year and has a 2.4% yield. In fact you have to look hard for a stock with a decent yield that has been down this year (oil stocks for example -5% for BP).

Further to this theme, if you are looking for bank stocks (which have been beat-down) then you can explore the preferred share market. I have found some preferred stocks yielding well over 7%. For example Bank of America BML-Q with and 8.65% note. ING bank has IGK which is an 8.5% note. Both BML-Q and IGK are selling below the call price of $25, so in effect the payouts are higher. Be cautious in that the dividends can be suspended. (BML-Q just paid out its dividend last week). If the banks don't do it for you, you could look at Ford's F-A with a 7.5% note. F-A is also trading below its call price of $25.

Whether you get yield from a strait stock play, or you seek bigger yields from the preferred market, you can quickly see these numbers pile up in your favor over the long-term.