4 High-Yield Dividend Stocks To Weather The Storm Plus 4 That Could Power Through It

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 |  Includes: AEO, DLX, DUK, EXC, INTC, LLY, MSFT, T
by: Francis Fiduk
When choosing stocks that will get through uncertain periods, stocks that yield dividends are always an excellent choice. Some stocks, however, once they start taking a beating, drop their dividend, while others start piling on debt in order to keep paying out. There are others, however, able to hold their own through the storm, keep paying out, and not put their company in any debt holes which will hurt future dividends or earnings. The latter is what I will be focusing on.

Stocks to Weather the Storm

For these dividend choices, I stay away from all financials and real estate. The government has sued at least 17 banks over mortgage issues, including Bank of America (NYSE:BAC) Citigroup (NYSE:C) Deutsche Bank (NYSE:DB) JP Morgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) with more to come. Where the potential fallout over financials and real estate will land is anyone’s guess. For this reason, I stayed far away from financials and real estate to help get through the uncertainties over the next few years.

I also used these metrics to build this list: low P/E, high yield, dividends that are well covered by EPS, price stability, and good ROE.

Duke Energy (NYSE:DUK): People are always going to need electricity in any environment. Also, DUK has a very strong balance sheet.
  • Current Price: 18.78
  • 52 Week Range: 16.87 – 19.50
  • Yield: 5.32%
  • P/E: 12.2
Deluxe Corporation (DLX): No matter what economic environment we end up in, people will still need supplies in order to work, and DLX provides those supplies. DLX kept its dividend steady throughout 2008 which is a great sign.
  • Current Price: 20.30
  • 52 Week Range: 17.24 – 29.30
  • Yield: 4.93%
  • P/E: 6.8
Exelon Corporation (NYSE:EXC): Gotta love utilities in times like these. Not much else to talk about here. Like DUK, EXC provides electricity which we are always going to need, except EXC targets primarily commercial and industrial customers.
  • Current Price: 42.61
  • 52 Week Range: 39.05 – 45.27
  • Yield: 4.93%
  • P/E: 10.6
Eli Lilly and Co (NYSE:LLY): Just as people will keep going to work, people will continue to need pharmaceutical products. LLY has seen steady earnings, and a steadily increasing dividend.
  • Current Price: 36.44
  • 52 Week Range: 33.46 – 39.78
  • Yield: 5.38%
  • P/E: 6.8

Stocks to Power through the Storm

For this list, I looked for stocks with a good dividend that most investors wouldn’t mind holding onto. At the same time, I also wanted stocks that had a good chance to shake off the market trend and move in their own direction - up.

AT&T (NYSE:T): People were obviously upset about the T-Mobile issue that's arisen, so T took a 5% beating. But T doesn’t need T-Mobile (OTCQX:DTEGF) , it is more of a bonus. If it ends up falling through, it will hurt T's stock price, but that will also make the dividend stronger. All T needs is some good news of any kind and this stock will take off.
  • Current Price: 28.05
  • 52 Week Range: 31.94 – 27.06
  • Yield: 6.13%
  • P/E: 8.5
Microsoft (NASDAQ:MSFT): There are a lot of rumors going around that MSFT is raising its dividend. If it does, this stock will take off. If it doesn’t, MSFT is still a solid company and one worth holding on to.
  • Current Price: 25.80
  • 52 Week Range: 23.65 – 29.46
  • Yield: 2.48%
  • P/E: 9.6
Intel (NASDAQ:INTC): INTC, like MSFT, is in solid shape. Both of these companies could take a severe financial beating, and still have the capability to pay out those dividends. INTC is in a league of its own with semiconductors. There is no reason this company can’t hit $40 a share. That would make its dividend more appropriate at ~2.15%
  • Current Price: 19.64
  • 52 Week Range: 23.96 – 17.75
  • Yield: 4.28%
  • P/E: 9.0
American Eagle Outfitters (NYSE:AEO): AEO has had a rough few quarters with the incredible increase in cotton prices beginning August 2010; the commodity nearly tripled in price by March 2011. Now that cotton prices are now on their way back to earth, expect AEO’s margins to start looking a lot better. As a side note, could AEO be looking at a buyout?
  • Current Price: 10.44
  • 52 Week Range: 10.01 – 17.46
  • Yield: 4.21%
  • P/E: 12.2

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AEO, MSFT over the next 72 hours.