| Weatherproof
Your Portfolio with Dividend-Paying Stocks |
Published: July 1, 2006
Investors are nervous -- about interest rates, commodity prices,
inflation, stagflation, you name it -- and the markets are turbulent.
After soaring to a five-year closing high on May 5th, the S&P 500
has dropped like a lead balloon.
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The jury is still out if this is just a short-term correction or the
start of a bear market. However, one thing is certain -- given the
increasing volatility, income investors would be wise to weatherproof
their portfolios with dividend-paying stocks that can stand their ground
when the going gets tough.
Amid the latest sell-off, a few solid, high-yield stocks held up
especially well. While other stocks swooned to multi-week lows, the
lucky six star performers listed below continued to shine. In fact, they
did better than hold steady -- they gained an average of +5.8% during
some of the roughest days the market has faced so far this year.
Creme de la creme
I started my search for these bulletproof stocks by looking for issues
that gained at least +1% when the rest of the market was faltering. In
addition, I required a minimum dividend yield of 6%.
So far, so good, but we all know that short-term performance is not a
good gauge of a stock's longer-term staying power. I don't want to
invest in shooting stars that flame up one day only to burn out the
next.
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Editor's
Note: Carla Pasternak's model portfolios focus
exclusively on investment opportunities with ultra-high yields.
In fact, in each of her monthly High-Yield Investing
newsletters she provides readers with an entire portfolio of
stocks, funds and preferreds that are delivering annual
dividend yields of +10% or more. That's right -- in order to
even be considered for inclusion in this portfolio, a particular
investment opportunity must deliver cash payments of at least
10% per year. Visit
this link to learn more about Carla Pasternak's High-Yield
Investing newsletter.
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To test their mettle over the long haul, I then subjected these
stocks to a battery of tests:
Have they consistently outperformed the S&P 500?
To pass my screen, a stock had to show positive returns on a consistent
basis. Since many of the stocks that made it through the first round
were recent IPO's (initial public offerings), I gauged their performance
on the returns they've delivered so far this year.
The stocks that made it to my final list (see below) have delivered an
average +21% return year-to-date, far ahead of the S&P's flat
performance or even the Dow Jones Select Dividend Index's somewhat more
impressive +2.8%.
Of course, past performance is no
guarantee of future success. So I raised the bar once again to ensure
that this solid performance was driven by strong fundamentals and
positive long-term growth outlooks.
Are share price gains driven by strong fundamentals?
For starters, I reviewed each company's earnings outlook. I required
earnings growth of at least +5% this year, next year, and over the next
five years. On average, the stocks listed below are expected to boost
their earnings at a remarkable average pace of roughly +100% this year.
Their growth will continue at an estimated +44% clip in 2007 and
maintain a healthy +8% over the next five years.
After running this search
through StreetAuthority's advanced scanning software, I managed to
uncover six high-quality, dividend-paying stocks with yields of greater
than 6%. All six of these firms have held up well amid the market's
recent turbulence, and each of these winners is likely to continue to
move higher in the coming months.
The following six firms made the grade . . .
Important Note: Throughout the
remainder of this article, editor Carla Pasternak provides a closer look
at some of the top-performing income stocks for today's volatile market
environment, one of which sports a dividend yield of 10.4%. However, in order to view the remainder of this article, you'll
need to subscribe to our premium income-oriented newsletter -- High-Yield
Investing. After you subscribe you'll receive immediate
access to this full article, as well as our monthly High-Yield
Investing newsletter and a host of additional premium content.
Please visit one of the following links to continue...
Good investing!
Carla Pasternak
Editor
High-Yield Investing
http://www.StreetAuthority.com
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Investing. |
Carla
Pasternak draws on a variety of financial backgrounds to make profitable
calls on income-generating stocks for her readers.
Carla has
been employed in the investment industry for more than two decades. In
addition to her work as a writer for several other nationally recognized
financial publishers, her previous experience includes a position as
President of a well-respected investor relations firm. She has also been
writing shareholder reports for public companies (annual reports,
speeches, corporate profiles, slide shows, etc.) since 1980.
A highly
successful investment analyst, Carla specializes in high-yield,
income-paying stocks. In that pursuit, she's always mindful to select
companies that not only pay rich dividends, but that also have the
potential to deliver strong long-term capital gains.
On the
educational front, Carla holds both MBA and Ph.D. degrees. When she's
not watching the market, she's teaching business courses at the college
level and managing several million dollars in portfolio assets.
