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Forget CD's and Treasuries, Dow stocks have handsome yields



By Dian Vujovich

While it’s not the hap-hap-happiest of economic times, there still are investors in the marketplace, some willing to put new money into the stock market, profits to be made and income to be received.

From this week’s Weekly Marketmail (Aug.23) from Navellier, here’s some of Louie’s thinking: “If I am right, then the Fed’s low interest rate policy will last for the next several years, setting the stage for an explosive stock market rally. Investors now get a higher yield (and pay lower taxes) on their Dow stock dividends than in Treasury bonds. The last time this anomaly happened for any extended period of time was back in 1956, which was a terrific time to buy stocks. With Treasury rates so low, investors can now buy good stocks for income and then essentially get the future growth of those companies for free!…. As for earnings, 2010 is shaping up to be the best year for corporate earnings in my lifetime. The bottom line is that most corporations are flush with cash and are using that cash to raise dividends, and then merge or buy up other companies that are selling at bargain price/earnings ratios.”

Who knows how long the Fed will keep interest rates low or whether stock prices will explode upwards any time soon. But what I know for sure is that there are some stocks out there with juicy dividends yields.

So instead of taking all of Louie’s words as gospel, I looked at yields on the 30 stocks that make up the Dow and low-and-behold, of them 24 had yields of 2 percent or higher based upon yesterday’s closing prices (August, 24, 2010). That’s two dozen! And that’s incredible.

So for those who have been whining about the puny returns in their savings or money market accounts, or the yields on certificates of deposits and Treasuries, there’s income to be had if you’ll only look elsewhere.

Want yields of over 6 percent? At yesterday’s closing share price, Verizon and AT&T could provide that. As for other companies, Pfizer’s yield was nearly 5 percent with Merck, Dupont and Chevron in the 4 percent range. Nine companies had yields in the 3 percent range; eight yielding 2.18 to 2.98 percent; and only two had yields under 1 percent, Hewlett Packard and Bank of America. This according to indexarb.com.

Regarding the stocks I like to keep my eye on selling under 20 bucks a share in the DJIA, it’s back to five and the same usual suspects. Here they are with price and yields as of 8/24/10: Alcoa, $10.06, dividend yield 1.19 percent; Bank of America, $12.64, yield 0.32 percent; General Electric, $14.57, yield 3.29 percent; Intel, $18.41, yield 3.71 percent; and Pfizer at $15.82 per share with a dividend yield of 4.93 percent.


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