Leif Peterson

The 10 Best U.S. Dividend Stocks

My guess is that the dividend yields of these stocks are low, and in the 3-4% range. There are other well run US corporations whose yields are twice as high, whose risk of reducing dividend payouts is low. These other companies have also increased their dividend yield and have shown increased earnings through the recent subprime mortgage crisis of Sept/Oct '08.

Market Timing vs. Dividend Income Strategies

Good article. As you know, however, there are other stocks with 2 to 3 times the yield, whose earnings are continually growing. Here's a gift to the new dividend investor: Kinder Morgan (KMP) a natural gas pipeline MLP, which has a continual yield of 8% and has done very well over the last year. Altria(MO) and Phillip-Morris (PM) (if you have no problem owning tobacco stock) have always done well, but can be at huge risk for law suits. The other basics to a depression-proof dividend portfolio are Pfizer(PFE), Procter & Gamble(PG), McDonalds(MCD), Duke Energy(DUK), Con Edison(ED), AXA (huge French insurance conglomerate), YUM Brand Foods (YUM, Taco Bell, Pizza Hut, KFC especially in China), and Diagio (symbol DEO, produces Smirnoff vodka, Johnnie Walker Scotch whiskies, Captain Morgan rum, Baileys Original Irish Cream liqueur, JeB scotch whisky, Tanqueray gin, Guinness stout, Jose Cuervo) are not bad. Coca Cola (KOF) in Latin America always does well. Dont' forget General Mills (GIS) which did very well through Sept-Oct last year. Last, big oil, like Exxon Mobil (XOM) and Chevron (CXZ) are portfolio musts.

A lot of the above listed stocks have 2-3% yields which is low. If you do some homework or join some dividend services, you can find depression-proof stock with 8-12% yields.

The basic requirements for a depression dividend stock portfolio right now are:

1. Continually increased earnings through the Sept-Oct crash last year and over Q1, Q2 this year.

2. Low risk for reducing dividend.

3. Greater than 500 million USD (or >1b) in market capitalization.

4. Either a pharmaceutical, big oil, or big consumer staple.

The Next Bull Market Is 4-8 Months Away

You could sell growth stocks now if you fear another large correction. However, I wouldn't sell dividend stocks for which the companies earnings and dividends are ever-increasing. Such stocks are not the type that you jump out of and get back into because of volatility and herd mentality.

Why You Should Stick With the Dollar and the U.S.

Thanks for the comments. The intent of the article was to contrast the current crises in the US economy with recent history for country with a high literacy rate whose economy acutely dissolved (i.e., "dissolution of the USSR"). By acutely, I mean short-term rather that chronic (long-term) loss of a currency base.

In 2007, data reported by the UN (hdr.undp.org/en/report.../) suggest the literacy rate for the Russian Federation was 99.4% (ranked 11), while for the largest countries in the world the literacy rates were China 90% (ranked 85), India 61% (ranked 147), US 99% (ranked 17), Indonesia 90.4 (ranked 87), Brazil 88.6% (ranked 95). Pakistan 49.9% (ranked 160), and so on.

Because this article is about the US, the only other large country in the world with a similar literacy rate whose economy recently acutely dissolved is the USSR. Japan ranks 10 in the world population and has a 99% literacy rate, but I don't see that the "lost decade" compares to the dissolution of the USSR. Readers may not understand the implications of this. What's interesting is that the economy quickly dissolved in a country (USSR) whose literacy rate was one of the greatest in the world.

Looking at the Human Development Index (DHI, hdr.undp.org/en/statis.../ ), which combines life expectancy, literacy, and standard of living, Japan's ranks 8 in the world, while the US ranks 15, RF ranks 73, China ranks 94, and India ranks 132. Again, in terms of HDI, it's more appropriate to contrast the US with RF(USSR) before China and India if you need to use an example of an economy that quickly dissolved.

As a totally relevant aside, I have been the principal on many joint US-Russian nuclear research projects with Moscow-trained scientists, and have been doing nuclear research in several CIS countries over the last 20 years. Thus, I never really never *compare* the US. vs. RF. If you contrast economies of the US and RF, however, they are fundamentally different. I only used the historical case of the dissolution of the USSR as an example of rapid devaluation of a currency base in a highly literate country.