Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Buy These Stocks Before the Trend Reverses

I probably would have shied away from writing a follow-up column if I had given bad advice ... but it turns out my advice was solid.

As I pointed out at the beginning and in the middle of 2008, dividend-paying stocks make the best bear-market investments.

The reasons are simple:

1. Dividend yields rise as stock prices drop.

2. Companies that have the quarterly obligation to pay dividends to shareholders tend to be more financially able to withstand difficult times.

But as I pointed out last February, it's important for investors to buy shares of the strongest dividend-paying companies. In other words, companies with realistic payout ratios.

Yet even though the market has rocketed off bear-market lows ...
Today is still a perfect time to get in on dividend-paying stocks.


Many strong stocks are still yielding more than their five-year average, but not necessarily because their underlying businesses are on the rocks. No, these high yields exist because the stock's price is still depressed.

Just take a look at these mid caps and large caps and their attractive yields. All of these companies have increased their dividend payments over those five years (an excellent sign of health).


5-Year Average
Dividend Yield

Dividend Yield

5-Year Average
Growth Rate
in Dividend

Nucor (NYSE: NUE  )




Lockheed Martin (NYSE: LMT  )




Eli Lilly (NYSE: LLY  )




McDonald's (MCD)




ConocoPhillips (NYSE: COP  )




Merck (NYSE: MRK  )




Chevron (NYSE: CVX  )




Data from

How you can cash in today
So regardless of whether the market has completely bottomed or we're just enjoying a brief upward surge, you'd do well to buy strong dividend-paying stocks while their prices are relatively low and they can still boast such historically high yields.

After all, you'd hate to end up missing out on the next short-term movement up, or -- even worse -- the long-term trend that dividend-paying stocks have of outperforming.

Here at the Fool, James Early -- advisor of Motley Fool Income Investor -- and his team scour the market every month for new dividend stock ideas -- and right now they're finding many.

In addition to these new recommendations, the Income Investor team has compiled a "best in class" group of six core dividend stock recommendations, each of which boasts a long history of paying out dividends to shareholders and outperforming the market.

Find out which stocks made the cut, along with the team's top dividend pick for this month, by clicking here.

Already a member of Income Investor? Log in at the top of this page.

This article was originally published Aug. 12, 2009. It has been updated.

Adam J. Wiederman always takes note of investing trends and acts accordingly, but doesn't own shares of the companies above. The Motley Fool's disclosure policy is trendy.

Read/Post Comments (1) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1130279, ~/Articles/ArticleHandler.aspx, 10/24/2016 12:13:27 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,229.02 83.31 0.46%
S&P 500 2,150.32 9.16 0.43%
NASD 5,300.92 43.52 0.83%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 11:57 AM
COP $42.28 Up +0.74 +1.78%
ConocoPhillips CAPS Rating: ****
CVX $100.76 Down -0.55 -0.54%
Chevron CAPS Rating: ****
LLY $78.18 Down -0.07 -0.09%
Eli Lilly and Co. CAPS Rating: ***
LMT $231.82 Up +1.30 +0.56%
Lockheed Martin CAPS Rating: ****
MRK $60.99 Down -0.21 -0.34%
Merck and Co. CAPS Rating: ****
NUE $47.87 Down -0.01 -0.01%
Nucor CAPS Rating: *****