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Hary (Hersh) Cohen was recently on CNBC to discuss his thoughts on the market and his favorite dividend paying stocks. Hersh is the Chief Investment Officer of ClearBridge Advisors and he leads a team that manages Dividend Strategy and Equity Income Builder products. He said that many companies are raising dividends aggressively in 2012, and he is expecting these above average increases to continue.

Hersh explained that this positive dividend growth is just one more reason to invest in high yield dividend stocks. He said that there is no better alternative to dividend stocks for investors seeking income, as long as the Fed is keeping rates low.

During the interview Cohen did list a few of his favorite dividend stocks, which are included in the top holdings of the Clearbridge equity fund. With the exception of Apple, 9 of the top 10 holdings are dividend-paying stocks.

Exxon Mobile Corp (XOM)

Exxon is a large and diversified energy holding company. XOM has a dividend yield of 2.2% and a 5 year dividend growth rate of 8.05%. The company started paying dividends in 1882 and has increased its dividend for 29 consecutive years. It has a payout ratio of 22%.

Procter & Gamble (PG)

Procter & Gamble is a global consumer goods company that manufactures and sells personal goods products. PG has a dividend yield of 3.1% compared to its 5 year yield average of 2.9%. The company started paying dividends in 1891 and has increased its dividend for 58 years. The 5 year dividend growth rate is 11.1% and the payout ratio is 62%.

Waste Management (WM)

Waste Management provides waste collection, recycling and disposal services to its customers in North America. WM has a dividend yield of 3.9% compared to its 5 year yield average of 3.7%. The company started paying dividends in 1986 and has increased its dividend for 8 consecutive years. It has a payout ratio of 67%.

Microsoft Corporation (MSFT)

Microsoft is a international software company that develops and supports a wide range of technical products. Mr. Softy has a dividend yield of 2.2%, which is just barely above its 5 year yield average of 2.1%. The company started paying dividends in 2003 and has increased its dividend for 6 consecutive years. MSFT has a 5 year dividend growth rate of 13.7% and a payout ratio of 26%. Hersh did say that Microsoft is a very different story after its recent run, and personally, we would like to see the dividend growth rate go higher. We have held this stock since it was at $25 and have a $35 price target on it for 2012.

Kimberly-Clark (KMB)

Kimberly-Clark is a global personal care business that develops and sells tissue and health care products. KMB pays an annual dividend of $2.96 which gives it a dividend yield of 3.9%. It has a 5 year dividend growth rate of 7.2% and a payout ratio of 71%. The company started paying dividends in 1935 and has increased its dividend for 37 years.

Heinz (HNZ)

Heinz manufactures and sells a wide range of food products that are sold worldwide. HNZ has a dividend yield of 3.6% and a payout ratio of 63%. The company started paying dividends in 1911 and has a 5 year dividend growth rate of 7%. It has increased its dividend for 7 years.

Wal-Mart (WMT)

Wal-Mart operates retail stores around the world, most of which are in the United States. WMT has a dividend yield of 2.4%, which is 8% higher than its 5 year yield average. Wal-Mart started paying dividends in 1973 and has increased its dividend for 36 consecutive years. It has a 5 year dividend growth rate and a payout ratio of 34%.

Bristol-Myers Squibb (BMY)

Bristol-Myers is a global biopharmaceutical company that develops and distributes products around the world. BMY has a dividend yield of 4% compared to its 5 year yield average of 5%. The company started paying dividends in 1900 but only has 2 years of consecutive dividend increases. It has a 5 year dividend growth rate of 3.5% and a high payout ratio of 89%.

Chevron Corp (CVX)

Chevron is a large and diversified energy company with operations in petroleum, chemicals, mining, power generation and energy services. CVX has a dividend yield of 2.9% compared and a 5 year dividend growth rate of 8.9%. The company started paying dividends in 1912 and has a payout ratio of 24%, which is lower than its average payout ratio of 31%.

Source: Hersh Cohen's Top 9 Dividend Stocks