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The Federal Reserve's monetary policy is making life hell for responsible investors who don't want to take excessive risks to get decent returns. Long-term Treasuries yield around 2% and it is no longer an option for many investors. Fortunately, there are two alternatives for investors. Investors who prefer high current yields can invest in high dividend stocks like AT&T (NYSE:T), and Altria (NYSE:MO) that yield at least 5%. Younger investors who have the luxury to wait can invest in stocks with lower dividend yields but higher expected EPS growth rates. These stocks yield at least 3% and are expected to grow their earnings by at least 10% annually over the next 5 years. These stocks should be able to boost their dividends significantly as their earnings increase.

Investing in a stock with a 3% current yield would be a better investment than investing in the 10-year treasuries if the stock doesn't lose more than 10% its value over the next 10 years. Given that these stocks are expected to increase their earnings by at least 10%, a well diversified portfolio of these stocks is unlikely to lose 10% of its value over a 10-year period. It is more likely that Fed's monetary policy will lead to inflation and 10-year treasury investors will be under water after taking into account the decline in the purchasing power over the next 10 years. Below is a list of dividend stocks that are expected to outperform the 10-year treasuries. All companies in the list have at least $10 billion market cap, over 3% dividend yield, and their EPS are expected to grow by over 10% over the next five years. The data is sourced from Finviz.

Ticker

Company

Dividend Yield

Exp. EPS Growth Rate

YTD Return

MSFT

Microsoft Corporation

3.11%

10.65%

-5.48%

GE

General Electric

3.67%

13.25%

-8.46%

PM

Philip Morris Intl

4.06%

11.41%

33.76%

INTC

Intel Corporation

3.36%

10.65%

23.14%

VZ

Verizon Communications

5.26%

10.68%

12.11%

EMR

Emerson Electric Co.

3.07%

13.12%

-6.27%

BLK

BlackRock, Inc.

3.12%

18.15%

-4.66%

SCCO

Southern Copper Corp.

7.88%

15.15%

-31.29%

ITW

Illinois Tool Works Inc.

3.06%

13.46%

-10.09%

TRI

Thomson Reuters

4.60%

13.07%

-24.98%

KMI

Kinder Morgan, Inc.

3.88%

26.06%

2.15%

TWC

Time Warner Cable Inc.

3.06%

15.26%

-2.21%

WMB

Williams Companies, Inc.

3.07%

19.55%

34.34%

PLD

Prologis, Inc.

3.93%

16.70%

-7.68%

NUE

Nucor Corporation

3.55%

34.90%

-4.04%

PAYX

Paychex Inc.

4.31%

10.93%

0.03%

RSG

Republic Services, Inc.

3.26%

14.15%

-7.56%

Microsoft Corporation (NASDAQ:MSFT): Microsoft is a software company. MSFT has a dividend yield of 3.11% and its EPS is expected to grow at 10.65% in the next five years. It has a market cap of $216B, a P/E ratio of 9.35, and lost 5.48% so far this year. Boykin Curry’s Eagle Capital Management invested nearly $500 million in MSFT at the end of September.

General Electric Company (NYSE:GE): General Electric is a technology and financial services company. GE has a dividend yield of 3.67% and its EPS is expected to grow at 13.25% in the next five years. It has a market cap of $172B, a P/E ratio of 13.39, and lost 8.46% so far this year. Ken Fisher’s Fisher Asset Management had $478 million invested in GE.

Philip Morris International, Inc. (NYSE:PM): Philip Morris International is a multinational cigarette company. PM has a dividend yield of 4.06% and its EPS is expected to grow at 11.61% in the next five years. It has a market cap of $132B, a P/E ratio of 16.04, and returned 33.76% so far this year. Tom Russo’s Gardner Russo & Gardner invested over $500 million in PM shares.

Intel Corporation (NASDAQ:INTC): Intel is a semiconductor chip maker. INTC has a dividend yield of 3.36% and its EPS is expected to grow at 10.65% in the next five years. It has a market cap of $127B, a P/E ratio of 10.83, and returned 23.14% so far this year. Ken Fisher had $414 million invested in INTC.

Verizon Communications Inc. (NYSE:VZ): Verizon is a company that provides communications services. VZ has a dividend yield of 5.26% and its EPS is expected to grow at 10.68% in the next five years. It has a market cap of $108B, a P/E ratio of 15.28, and gained 12.11% so far this year. Phill Gross and Robert Atchinson’s Adage Capital Management had $153 million invested in VZ shares.

Emerson Electric Co. (NYSE:EMR): Emerson Electric designs and supplies product technology, and delivers engineering services and solutions. EMR has a dividend yield of 3.07% and its EPS is expected to grow at 13.12% in the next five years. It has a market cap of $38.4B, a P/E ratio of 15.99, and lost 6.27% so far this year. Ken Fisher had over $200 million invested in EMR.

BlackRock, Inc. (NYSE:BLK): BlackRock is one of the best investment management firms. BLK has a dividend yield of 3.12% and its EPS is expected to grow at 18.15% in the next five years. It has a market cap of $31.5B, a P/E ratio of 13.9, and lost 4.66% so far this year. Bill Miller’s Legg Mason Capital Management held the biggest position in BLK. The fund had $160 million worth of BLK stocks at the end of the third quarter.

Southern Copper Corp. (NYSE:SCCO): Southern Copper is an integrated copper producer. SCCO has a dividend yield of 7.88% and its EPS is expected to grow at 15.15% in the next five years. It has a market cap of $26.3B, a P/E ratio of 11.56, and lost 31.29% so far this year. John Burbank’s Passport Capital invested $27.5 million in SCCO.

Illinois Tool Works Inc. (NYSE:ITW): Illinois Tool Works is a manufacturer of advanced industrial technology. ITW has a dividend yield of 3.06% and its EPS is expected to grow at 13.46% in the next five years. It has a market cap of $22.7B, a P/E ratio of 11.88, and lost 10.09% so far this year. Sandy Nairn’s Edinburgh Partners initiated a brand new $232 million of ITW during the third quarter.

Thomson Reuters Corporation (NYSE:TRI): Thomson Reuters provides information for the businesses and professionals in the world. TRI has a dividend yield of 4.60% and its EPS is expected to grow at 13.07% in the next five years. It has a market cap of $22.3B, a P/E ratio of 16.15, and lost 24.98% so far this year. Jim Simons’ Renaissance Technologies had $14 million invested in TRI shares at the end of September.

Other dividend stocks with high growth expectations include Kinder Morgan, Inc (NYSE:KMI), Time Warner Cable Inc (NYSE:TWC), Williams Companies, Inc (NYSE:WMB), Prologis, Inc (NYSE:PLD), Nucor Corporation (NYSE:NUE), Paychex Inc (NASDAQ:PAYX), and Republic Services, Inc (NYSE:RSG). Under the current market situation, we believe these stocks are better choices than 10-year Treasury bonds and we strongly recommend investors to consider these stocks for their portfolio.

Source: 17 Dividend Growth Stocks for Long-Term Investors