High Yield Dividend Stocks Reduce Risk of Your Trading Strategies

   

Investment in dividend stocks has come back into favor among trading strategies now that the stock market has gotten rocky in May. A high dividend yield allows your investment to keep paying you even if the stock moves sideways — or even if your dividend paying stocks roll back a bit. The best dividend stocks are not necessarily investments that will see soaring share prices overnight but rather pay reliable dividends and offer a high yield no matter what happens in the stock market.

This may not sound sexy to swing traders — but for low risk investors looking for trading strategies that deliver high income without the gut-wrenching ride, high yield dividend stocks are sounding better with each passing day.

The Dow Jones Industrial average has lost over -10% so far in 2010, and the S&P 500 index and Nasdaq have fared even worse. So if you want to protect your investment portfolio with a trading strategy that works, consider high yield dividend stocks that deliver a consistent payday no matter what happens on Wall Street.

Not sure where to find these high yield dividend stocks? Here are a list of the best investment sectors to start looking for these stock picks:

Euro Zone ADR Investments with High Dividend Yields

The top blue chip dividend stocks tend to being foreign based right now, mostly since ADR shares have been battered by sovereign debt fears in the euro zone and European stocks are boasting high dividend yields as a result.

Banco Santander (STD), a financial group operating mainly in euro zone regions like Spain and Portugal as well as the U.K., currently boasts a whopping 11.2% dividend yield. That’s more because of share price drops than dividend increases, however, as STD stock is down about 40% year-to-date in 2010. Telecommunications ADR France Telecom (FTE) is in the same boat, with a current 10.8% dividend yield after recent declines. German ADR Deutsche Telekom (DT) offers a high dividend yield of 9.6%.

Here are some of the top ADRs with high dividend yields:

Symbol

Company Name

Dividend Yield

Market Cap

STD

Banco Santander

11.2%

$86 Bil

FTE

France Telecom

10.7%

$50 Bil

DT

Deutsche Telekom

9.5%

$47 Bil

VOD

Vodafone Group

8.7%

$98 Bil

TEF

Telefonica

8.7%

$86 Bil

PT

Portugal Telecom

8.6%

$8 Bil

SID

Companhia Siderurgica Nacional

8.3%

$21 Bil

YPF

YPF Sociedad Anonima

8.1%

$14 Bil

Major Pharmaceutical Stocks with High Dividend Yields

Another great place to find stocks with high dividend yields right now is among the major pharmaceutical companies. These stocks tend to be extremely cash-rich and have a history of strong dividend payments and high dividend yields. Since their business is keeping people healthy, these companies also tend to see some stability thanks to recession proof sales.

AstraZeneca (AZN) is at the head of the pack, but like some of the aforementioned euro zone ADRs this stock is seeing a big dividend yield mostly because of debt trouble in Europe where the stock is headquartered. Stock boasts a yield of 8.2% but shares of AZN stock are down about 20% from its recent peak in January. Glaxosmithkline (GSK), Bristol-Myers Squibb (BMY), Merck (MRK) and Pfizer (PFE) all have dividend yields in the same range of around 4.7% to 5.5%.

Here are other high yield pharmaceutical stocks paying dividends right now:

Symbol

Company Name

Dividend Yield

Market Cap

AZN

Astra Zeneca PLC

8.2%

$59 Bil

LLY

Eli Lilly and Co

5.9%

$38 Bil

SNY

Sanofi Aventis

5.6%

$76 Bil

GSK

Glaxosmithkline

5.6%

$85 Bil

BMY

Bristol-Myers Squibb Co

5.6%

$40 Bil

MRK

Merck & Co Inc

4.8%

$99 Bil

PFE

Pfizer Inc

4.7%

$123 Bil

NVS

Novartis

4.4%

$103 Bil

Utility Stocks with High Dividend Yields

Utility Stocks are a favorite fall-back of dividend stock investors, since these companies tend to have very reliable and consistant revenue and profits and thus a stable flow of cash on which dividends can be based. After some recent dips in share prices, there are a number of dividend stocks in the utility sector that now boast high yields well above 5% or more.

National Grid (NGG) is a utility that operates in both the United States and in the United Kingdom, and boasts a hefty 8.7% dividend yield. More typical utilities many investors might recognize form their monthly home electric bill are Progress Energy Inc. (PGN), Ameren Corp. (AEE) and FirstEnergy (FE). These regional electricity providers all boast high dividend yields upwards of 6%.

Here are some other high yield dividend stocks in the utility sector:

Symbol

Company Name

Dividend Yield

Market Cap

NGG

National Grid PLC

8.7%

$20 Bil

PGN

Progress Energy Inc

6.5%

$11 Bil

VE

Veolia Environ

6.5%

$12 Bil

AEE

Ameren Corp

6.4%

$6 Bil

FE

FirstEnergy Corp

6.4%

$11 Bil

DUK

Duke Energy Corp

6.0%

$21 Bil

CNP

CenterPoint Energy Inc

5.9%

$5 Bil

PPL

PPL Corp

5.7%

$9 Bil

ED

Consolidated Edison Inc

5.6%

$12 Bil

SO

Southern Company

5.5%

$27 Bil

AEP

American Electric Power Co Inc

5.5%

$15 Bil

EXC

Exelon Corp

5.4%

$26 Bil

Telecom Stocks with High Dividend Yields

Of course, let’s not forget about high yield dividend stocks in the telecom sectors. For all intents and purposes, these companies are just another flavor of utility stocks – they provide a service that is essential to every American household and do not see big fluctuations in revenue or earnings. Of course, this means these stocks don’t really see big movements in share prices either. But in a volatile market that may actually be in your favor as a dividend investor instead of a swing trade investor.

Century Tel (CTL) has the best yield in the sector, above 8.6% as of this writing, but other more recognizable telecom players like Verizon (VZ) and AT&T (T) aren’t far behind with high dividend yields that are pushing 7%.

Here’s a list of domestic telecom stocks with high dividend yields:

Symbol

Company Name

Dividend Yield

Market Cap

CTEL

Century Tel Inc.

8.6%

$10 Bil

VZ

Verizon Communications Inc

6.9%

$78 Bil

T

AT&T Inc

6.9%

$144 Bil

Q

Qwest Communications Inc

6.3%

$9 Bil

 

One final word of caution, however: These dividend yields are annualized rates based on previous payouts. One big disbursement can skew the annualized yield for a stock. Also, as with any investment there are no guarantees on these yields — stocks may be raising dividend yields as a whole, but there’s no guarantee these dividends will stay put for long. Stocks cut or eliminate dividends all the time, even in good markets, so nothing is set in stone.

As of this writing, Jeff Reeves did not own a position in any of the stocks named here.

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Article printed from InvestorPlace Media, http://investorplace.com/2010/05/high-yield-dividend-stocks-trading-strategies-std-fte-dt-azn-bmy-gsk-mrk-pfe-vz-ctel-ngg-pgn-aee-fe/.

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