The market is starting to look a little overbought and everyone is expecting a sell off. Sometimes situations like these turn out to be self fulfilling prophecies. When everyone is expecting a pullback, it can lead to investors selling shares that they would have otherwise held on to. One of the ways that investors can protect themselves from a stock market drop is by owning some income plays. High yielding dividend stocks can provide you with income while you ride out a market slump. Here are 3 stocks that any dividend investor would like.
Duke Energy (NYSE:DUK)
Duke is like many of the other companies operating in the utilities industry. The company has a very slow growth rate and a nice dividend yield. Duke Energy is paying out a 5.4% yield which is comparable to Progress Energy (NYSE:PGN), Entergy (NYSE:ETR), and Excelon (NYSE:EXC). One of the attractive aspects of Duke besides the dividend is the company’s recent acquisitions and its investments in alternative energy sources. Duke is buying Progress Energy to widen its scope in the energy sector by becoming the largest power company in the United States. Duke has also been investing in its long term growth recently by buying wind farms and solar farms. Duke has the capabilities to expand its revenue base substantially and its dividend as well.
Blackstone Group L.P. (NYSE:BX)
The Blackstone Group is one of the leading asset management firms in the world. Unfortunately for Blackstone, the company was like any other money manager during the recession. The company saw investors pull funds and its stock price plummeted as revenues shrank. 2008 and 2009 were not kind to a company that specialized in private equity deals, debt financing, and real estate transactions. The stabilizing of financial markets has led to a return in funds and an increase in assets under management. Blackstone has been benefiting from the growing popularity of alternative investments. This limited partnership is seeing positive earnings again and investors are being rewarded with a generous dividend yield of 7%. The stock trades at just 12 times earnings which means that there is capital appreciation potential as well in this investment.
Frontier Communications (NASDAQ:FTR)
Let’s throw in a high risk dividend play with growth potential. Frontier Communications is a mid cap player in the communications space as the company provides voice, data, and video services to both individuals and businesses. Frontier trades at 28 times earnings for the year and the stock has a negative growth rate, Frontier has been reinvesting in its growth as the company has acquired additional telecom lines from Verizon. The stock has is selling for just $8 per share and is currently yielding 9.3%. The $1.2 billion in cash flow should allow the company to maintain its dividend while waiting for earnings to grow at the double digit clip expected next year. This one is for the dividend investor with an appetite for risk.
All three of these stocks offer dividend investors a yield north of 5%. These stocks should be able to grow earnings over the long term and offer income that is better than the average stock investment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.