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Several prominent investors have expressed their concerns about the Fed’s monetary policy and unsustainable budget deficits. Jim Rogers is extremely bearish about inflation. He thinks no matter what happens in the economy, it will lead to higher inflation, higher interest rates, and lower returns for long-term bond investors. Ray Dalio, the owner of World’s largest hedge fund, expects U.S. dollar inflation and he is bullish about emerging markets, commodities, and gold. Legendary investor Julian Robertson is in the same camp. He also expects commodities and China to perform well.

We like high dividend stocks and consider them as alternatives to 10-year Treasury bonds. High dividend stocks deliver higher current yields and usually increase dividend payments over 5-10 years. Like Jim Rogers and Ray Dalio, we are also concerned about the Fed’s inflationary monetary policy and want to protect ourselves against inflation. One of the ways of doing this without assuming significant risks is investing in high dividend stocks.

We compiled a list of utilities that have at least a 3% dividend yield, pay less than two thirds of their earnings in dividends and managed to increase their dividend payments by at least 2% annually over the past five years. A portfolio of these stocks is highly likely to outperform 10-year Treasury bonds over the next 10 years:

Company

Ticker

PE (TTM)

Dividend Growth Rate (5 yr. Avg)

2012 EPS/ Dividend

Dividend Yield

P P L CORP

PPL

11.4

4.9%

1.7

5.71%

D P L INC

DPL

11

5.9%

1.9

4.96%

AMERICAN ELECTRIC

AEP

14

4.5%

1.8

5.30%

ENTERGY CORP NEW

ETR

10.2

9.0%

1.8

4.99%

P G & E CORP

PCG

15.6

6.6%

2.2

4.15%

AVISTA CORP

AVA

14

14.5%

1.7

4.82%

SEMPRA ENERGY

SRE

18

9.9%

2.3

3.67%

NEXTERA ENERGY INC

NEE

11.6

8.0%

2.1

4.09%

UNISOURCE ENERGY

UNS

12.8

14.9%

1.7

4.73%

WISCONSIN ENERGY

WEC

15.9

17.7%

2.2

3.49%

U G I CORP NEW

UGI

13.1

8.2%

2.6

3.14%

PUBLIC SERVICE

PEG

10.3

3.7%

1.9

4.42%

ALLIANT ENERGY CORP

LNT

15.1

8.1%

1.8

4.39%

WESTAR ENERGY INC

WR

14.7

5.1%

1.6

4.93%

SCANA CORP NEW

SCG

13.2

2.9%

1.6

4.99%

DOMINION RESOURCES

D

9

7.4%

1.7

4.45%

C M S ENERGY CORP

CMS

14.5

3.1%

1.8

4.35%

X C E L ENERGY INC

XEL

14.9

3.3%

1.8

4.31%

NORTHEAST UTILITIES

NU

15.9

9.5%

2.2

3.25%

EDISON INTERNATIONAL

EIX

9.6

3.5%

2.1

3.54%

QUESTAR CORP

STR

16

6.3%

2

3.57%

O G E ENERGY CORP

OGE

16.8

2.4%

2.4

3.06%

CENTERPOINT ENERGY

CNP

16.5

5.7%

1.5

4.60%

BLACK HILLS CORP

BKH

19

2.0%

1.6

4.45%

NEW JERSEY RES

NJR

19.9

8.5%

1.9

3.43%

W G L HOLDINGS INC

WGL

15.4

3.1%

1.6

4.07%

NORTHWEST NATURAL G.

NWN

16.9

4.8%

1.6

3.79%

Billionaire hedge fund manager John Paulson recommended high dividend stocks as an alternative to long-term Treasuries as well. SAC Capital’s Steve Cohen had $53 Million in EIX in his portfolio at the end of December. Jim Simons had $21 Million in OGE and $11 Million in NJR at the end of December.

Disclosure: I am long PEG.

Source: 27 Best High Dividend Utilities For Conservative Investors