Timmothy Posey

6 Dividend Stocks for Current Income

I disagree with the author here. Although the picks are 'sound' in nature by historical fundamental analysis for dividend investors, there are some real risk involved here. These stocks do not have guaranteed dividends and any unfavorable economic event to any one of the stocks listed in the article would cause severe portfolio dislocation. I think it would be prudent to look into an ETF that has most of these stocks listed (along with several others) to help diversify away risk. One such example would be PFM, a collection of 282 stocks with strong dividends. This currently yields about 2.25%; which is about on average.

If you are also looking at dividend, I would go higher up in the capital structure and take a look at PGF or PGX, an ETF of preferred shares, where the current yield is about 8% a year in steady dividends (mostly made of financial companies). Although preferred shares do not typically increase dividend amounts, they are mostly guaranteed and cumulative in nature if they have to be suspended.

Lastly, HYG is a popular ETF of high-yield corporate bonds that yields nearly 10% a year. Corporate bonds have guaranteed requirements on payment of interest (dividends for the ETF holder) along with return of principal.