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Many investors thought that they could time the market to their advantage. But actually they just guessed about the psychology of other investors, trying to figure out when others might start selling. In fact this explains why so many investors were holding stocks while they also thought the market was overpriced, according to Robert Shiller from The Washington Post.

In today’s low interest rate environment, yield-hungry investors might want to invest in financially strong blue chip companies that offer the potential for stable and solid dividends. I filtered the 200 largest U.S. stocks (by market cap), and below are 20 highest dividend yield companies (sort by yield %).

Company
Ticker
P/E
Yield
Debt/Cash Flow
Reynolds American Inc.
16
7.4%
2.3
Altria Group Inc.
12
7.4%
3.4
Progress Energy Inc.
PGN
14
6.3%
13.6
Duke Energy Corporation
17
6.2%
6.0
AT&T, Inc.
13
6.2%
2.1
Consolidated Edison Inc.
16
5.9%
14.7
Lilly & Co.
5.9%
1.4
Verizon Communications Inc.
14
5.9%
2.3
Southern Company
15
5.6%
7.7
Bristol-Myers Squibb Co.
8
5.6%
2.1
Lorillard, Inc.
13
5.5%
0.9
Spectra Energy Corp.
13
5.3%
5.9
Dominion Resources, Inc.
12
5.2%
4.4
American Electric Power Co.
11
5.2%
7.7
EI DuPont de Nemours & Co.
44
5.1%
2.9
FirstEnergy Corp.
10
4.9%
4.9
PPL Corporation
15
4.7%
6.9
Merck & Co. Inc.
11
4.7%
2.6
Philip Morris International, Inc.
14
4.7%
1.9
HJ Heinz Co.
13
4.4%
4.1

Out of 20, 9 of them are utilities. Even though some utilities companies could be benefiting from the record low natural gas price, investors might be uncomfortable about their heavy debt.

Four of them are tobacco companies. Tobacco, specifically international tobacco, is proving to be exceptionally resilient to recession. However, not all of them are created equal. For example, Reynolds American and Altria Group Inc’s payout ratios are more than 100%. The best seems to be Lorillard, Inc. Its debt to operation cash flow ratio is 0.9. In other words, in theory it could pay off all its debt within 1 year. No wonder LO’s price is near its 2–year-high.

Three of them are pharmaceutical and 2 are tech related. Mary Buffett and David Clark point out in their new book Warren Buffett And The Interpretation of Financial Statements, what seems like a long-term competitive advantage is often an advantage bestowed upon the company by a patent or some technological advancement. If the competitive advantage is created by a patent, as with the pharmaceutical companies, at some point in time that patent will expire and the company’s competitive advantage will disappear. If the competitive advantage is the result of some technological advancement, there is always the threat that newer technology will replace it. Today’s competitive advance may end up becoming tomorrow’s obsolescence. I would rather own them through tech and pharmaceutical ETFs, instead of cherry picking potential winners.

As always, if you like ETFs, the following are the top 10 dividend ETFs (by net assets):

#
Fund Name
Ticker
1
iShares Dow Jones Select Dividend Index
2
Vanguard Dividend Appreciation ETF
3
SPDR S&P Dividend
4
WisdomTree LargeCap Dividend
5
Vanguard High Dividend Yield Indx ETF
6
WisdomTree International SmallCap Div
7
PowerShares Intl Dividend Achievers
8
WisdomTree Europe Total Dividend
DEB
9
WisdomTree Dividend ex-Financials
10
WisdomTree International Div ex-Fincls

Disclosure: I have a long position on PM.

Source: 30 High Dividend Stocks and ETFs