Amid the volatility in 2011, many investors took shelter in high-yield blue chips with stable operations. Tobacco giant Philip Morris International (NYSE:PM) tacked on 35% last year. Utility stocks like Dominion (NYSE:D) and Consolidated Edison (NYSE:ED) tacked on 25% gains. All while the S&P 500 struggled to stay flat.
A focus on dividends persists in 2012, even though stocks have recorded their best January since 1997. After all, a little gain in your portfolio is not a sign that problems like the eurozone debt crisis or the beaten-down U.S. housing market have been solved.
However, you have to admit that investors hiding out in sleepy blue chips have missed the great start to 2012. The Select Sector Utilities SPDR ETF (NYSE:XLU) is actually in the red year-to-date despite the rally for the broader market, and the broad-based iShares Dow Jones Select Dividend ETF (NYSE:DVY) also is sitting on a loss. The income these investments provide is nice, but you’re still being left behind.
A good middle road to walk, therefore, is midcap companies with decent upside potential for shares that still pay out a substantial dividend. These stocks are riskier and the dividends sometimes can be less stable, but they also show the power of investing in a growth stock that pays a dividend instead of a mature business already bumping its head against the ceiling.
Here are five dividend midcaps to consider: