Markets

8 Stocks With High Dividend Yields to Buy Now

By Conrad Aenlle

Updated on: August 17, 2011 / 9:21 PM EDT / MoneyWatch

Investors looking for income are hard pressed to find it in the usual places. Money-market accounts and bank deposits generally yield less than 1 percent, and 10-year Treasury bonds pay a slightly less meager 2.2 percent, close to the multi-decade low reached in 2008.

Bond yields have been pushed down in the last few weeks by investors fleeing the stock market and looking for something safer. Another consequence of the panic is that dividend yields on stocks have shot up. The yield on the broad market is higher than the 10-year Treasury yield, something that has occurred very few times in the last half century - a bullish sign, as noted in this recent post - and stocks of many high-quality companies yield far more than the market.

One top investment adviser, John Buckingham, chief investment officer of Al Frank Asset Management and editor of the Prudent Speculator newsletter, finds high dividend yields an especially appealing feature of stocks today, along with low valuations. Here are eight stocks that Buckingham recommends with dividend yields greater than the broad market and at least one percentage point higher than the yield on the 10-year Treasury. All of them are blue chips or very close to it.

Among the highest of the high-yielders are Verizon Communications (VZ), a leading conventional and wireless phone company, yielding 5.6 percent; DTE Energy (DTE), a Michigan electric and natural-gas utility, 4.9 percent; Waste Management (WM), a recycling and waste disposal business, 4.4 percent; Lockheed-Martin (LMT), an aerospace and defense contractor, 4.3 percent.

Other high-yield selections include the semiconductor manufacturer Intel (INTC), with a yield of 4.0 percent; the drug maker Abbott Laboratories (ABT), 3.8 percent; Home Depot (HD), a leading retailer of home-improvement products, 3.2 percent, and the food and drink purveyor PepsiCo (PEP), also 3.2 percent.

Buckingham conceded that the stock market is "certainly volatile," yet with valuations low and yields rising, he considers stocks "a relatively risk-free asset" for investors who can afford to keep their money working for the long haul. Instead of bonds, he told MoneyWatch, "I would rather own a diversified portfolio of undervalued stocks" paying high dividend yields. "Ultimately they're going to give you capital appreciation with that income."