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The official U.S. unemployment rate stood at 9.6% last month. The number of unemployed persons according to to government data totaled 14.9 million. 42% of those unemployed in August were long-term unemployed (27 weeks or more). Many of the other economic figures published nowadays are also negative. While some talk of a double-dip recession, others are even more pessimistic. For example David Rosenberg, chief economist of Gluskin Sheff recently outlined 13 reasons to suggest that this so-called recovery is actually a depression.

In an related note Matthew D. McCormick, Portfolio Manager at Bahl & Gaynor Investment Counsel said:

Many people believe the U.S. economy is out of the recession or close to it. At Bahl & Gaynor, we think this recession is like no other since the Great Depression and the subsequent recovery will be longer – and weaker – than most expect. Thus, an extended period of tepid economic and earnings growth is a distinct possibility. Such a recovery could be similar to the 1974 to 1982 economic “malaise.”

If a protracted economic stagnation similar to 1974 to 1982 repeats, then investors may want to invest in dividend paying stocks (click on chart to enlarge). The S&P’s price return during this period was an annualized 4.14%. However the total return (including dividends) for this period was an annualized 9.39%. Hence dividends accounted for 55.09% of the S&P 500’s total return.

Source: Bahl & Gaynor Investment Counsel

Ned Davis Research analyzed the S&P data for the same period and found that dividend paying stocks also outperformed non-dividend payers by an annualized 3.89%.

Hence instead of worrying about whether we may have a double-dip recession or not, investors looking to select some stocks for their portfolio may want to consider adding dividend paying stocks.

The SPDR S&P 500 ETF (NYSEARCA:SPY) has a 1.90% dividend yield and the iShares Dow Jones Select Dividend ETF (NYSEARCA:DVY) has a 12-Month Yield of 3.77%.

Some foreign stocks have much higher yields at current levels. A few of the high yielding foreign stocks include French utility giant Veolia Environnement (NYSE:VE) paying 5.75%, Italian oil major Eni SpA (NYSE:E) yielding 6.14%, Brazilian electric utility CEMIG (NYSE:CIG) with an yield of 5.17%, National Australia Bank Ltd (OTCPK:NABZY) paying 5.67% and Philippine Long Distance Telephone Co (NYSE:PHI) with a dividend yield of 6.22%.

Source: What to Invest in During a Period of Economic Malaise