Suppose I told you that there was a category of
investments in which you could make good money -- 4%, 5%,
even more -- while the bear reigns, and even
moremoney once things turn around.
Nope, it's not a
money market fund. They're safe, mostly, but you'll be
completely left out of any stock market rally.
Nope, it's not
corporate bonds. While they're an important part of many
retirement portfolios -- one that has been overlooked by many
of us in recent years -- they're likely to get driven down in
value as money moves back into stocks.
Nope, it's not Treasuries. (Have you looked at
Treasury yieldslately? People are giving up an awful lot
in exchange for that "full faith and credit" guarantee.)
It's stocks.
Yeah, OK, stop laughing now
That may seem like crazy advice after the stock market
bloodshed over the past year and a half. But stocks come in a
lot of different flavors -- and not all gains and losses come
from changes in share price.
Some stocks are exciting. Some stocks are boring. In good
times, many of us are drawn to the exciting stocks and shun
the boring ones. But right now, boring can be really
good.
Take
Kimberly Clark (NYSE: KMB). Here's a company
that's 136 years old and makes boring, low-growth products
with names like Kleenex, Huggies, and Cottonelle. About as
dull as it gets, right?
Think for a minute. We still haven't really put one doozy
of a recession behind us. People are still cutting spending
left and right. But if you've ever used generic toilet paper,
you understand why name brands command fantastic
recession-resistant loyalty. Folks might forego the pricey
steaks in favor of burgers this week, but they're not going
to forego the Cottonelle in favor of that awful scratchy
stuff. (But if they decide to compromise by getting the
cheaper semi-scratchy Scott's brand, that's OK -- K-C owns
that one, too.)
"But," I hear you saying, "the market downdraft has still
hurt their share price. They could get hurt more."
That's probably true. But meanwhile, you get dividends. At
today's prices, that's a yield of about 3.8% a year --
no matter what the stock market does.
And listen up: The best of these companies are ones you
can hold in your portfolio for decades. These aren't
short-term trades. Think of the current market as a
bargain-hunting opportunity -- but you get paid for holding
the bargain until it appreciates.
So what's worth buying?
A quick screen on
Motley Fool CAPSfor four- or five-star large-cap stocks
with dividend yields of 3% or more gave me 85 names,
including these:
Stock
CAPS Rating
(out of 5)
Current Dividend
Yield
ConocoPhillips (NYSE: COP)
*****
3.9%
Dominion Resources (NYSE: D)
****
5%
DuPont (NYSE: DD)
**** Continued... |