Stalking Dividends

April 7, 2009
Special Feature

The dividend play is back, as beaten-down stock prices have effectively boosted percentage yields.

There was a time when dividend payouts were one of the main attractions to owning stocks and the aim of many investors was to build a portfolio that would provide a steady income stream year after year. Then a succession of bull markets switched the emphasis to price growth until the brutal bear market that came on the scene last Fall. Now, say some market mavens, the dividend play is back, as beaten-down stock prices have effectively boosted percentage yields.

Even though the market is off its recent lows, say these investments gurus, trying to predict that it has hit bottom can be risky. In the meantime, there are several companies in good financial health that are paying dividends of 4% or more, offering the relative safety of a robust balance sheet along with yields that are better than money market funds. Long-term investors may also eventually see significant price appreciation if the bear ever loosens its stranglehold on the stock market.

Among the name companies that are paying dividends in the 4%-6% range are drug makers Astra-Zeneca (5.7%), Bristol-Myers Squibb (5.65%), and Novartis (4.5%). They are joined by food companies like Heinz (4.9%), Kraft (5.0%), and Sysco Corporation (4.0%), along with consumer products giant Kimberly-Clark (4.95%). Experts caution, however, that investors should still do due diligence when buying any stock. Check balance sheets and visit online financial sites to research any potential buys.