High-yield/macroeconomics (fka YIELD)

[Preciouslife1]

Stocks we love: 5 big dividends

http://money.cnn.com/galleries/2008/news/0802/gallery.dividend_stocks/index.html

Sometimes it just feels good to get a little something back. Consider these five consistent dividend-paying stocks for your portfolio.

How we chose the stocks Bond yields are relatively low right now. So if you're looking for something that pays you a steady income stream, you might be better off with a stock that offers a high dividend.

We sifted through thousands of stocks to bring you five that will pay a healthy dividend over the long haul and should also post steady, if not spectacular, earnings growth.

Each company has the potential to stand up reasonably well in this rocky market. Plus, all five companies have consistently increased their dividends over the past five years. What's more, they all have strong balance sheets...so they are likely to keep boosting their dividends in the years to come.

PepsiCo Pepsi is your classic safe haven stock for a weak economy.

With brands such as its flagship Pepsi soft drinks as well as Gatorade and Quaker under its wing, the company is a leader in the North American food and beverage market. But it is also well-positioned to expand internationally.

"Long-term international opportunities coupled with its dominant market positions in North America strengthen the company's already best-in-class position," wrote analyst Jonathan Feeney of Wachovia in a report.

The company's steady cash flow has allowed it to invest heavily in overseas growth, Feeney said.

Shares of Pepsi trade at about 19 times 2008 year-end estimates, in line with the valuation for its top rival Coca Cola. But Pepsi's earnings are expected to grow at a faster clip over the next few years.

Pepsi pays a dividend that yields an attractive 2.1%. That's a tad lower than Coke's 2.3% yield, but Pepsi's dividend payout has increased 20% a year, on average, over the past five years, compared to annual dividend growth of 11% for Coke.

Abbott Laboratories The drug and medical device maker recently received FDA approval for cholesterol drug Simcor, which could be a worthy contender for Vytorin, a drug created by rivals Merck and Schering-Plough.

And sales of Abbott's important Humira arthritis drug grew 42% over the fourth quarter, a good sign for the company. JPMorgan analyst Michael Weinstein thinks Abbott is worth buying. He expects earnings to grow 14% in 2008.

Abbott currently trades at about 17 times 2008 estimates and offers a dividend yield of 2.6%. And Abbott's dividend has increased 7% annually, on average, over the past five years. To put that in perspective, rivals such as Merck, Wyeth have boosted their payouts to investors by just 1% and 4% on average over the past few years.

Federated Investors controls about $302 billion in client assets, mostly in money market funds. At a time of such market uncertainty, more and more investors are likely to shift money into Federated's low-risk funds.

Citigroup analyst Prashant Bhatia thinks Federated is well-positioned to capitalize on a general shift of savings investments to money markets.

And even though Federated has reported that people have been pulling money out of the company's fixed income funds for the past 18 quarters, Bhatia maintains that the firm is "close to turning the corner" in its fixed-income business and could soon start posting net inflows into its bond funds.

Federated currently offers a dividend yield of 2%, and the dividend has increased at an average rate of 27% over the past five years. So like its money market funds, Federated's stock also offers some nice stability in a volatile market.

Emerson Electric/ As demand for industrial equipment in the U.S. and Europe begin to slow, Emerson Electric's diversification is, uh, paying dividends.

Sales grew 9% overseas in the last quarter compared to 5% in North America. Revenues were up 16% in Asia alone. Citigroup's Jeffrey Sprague predicts that high-growth emerging markets could account for 30% of total sales this year, helping to offset any domestic sales declines.

And the company is positioned to capitalize on the growing demand for energy efficient products worldwide. "Many of [Emerson's] businesses sit at the cross roads of the need for power and energy efficiency," wrote Sprague in a report.

Emerson currently offers a dividend yield of 2.3% and the dividend has increased at an average rate of 8% over the past five years.

Wm. Wrigley Jr./ For years, Wrigley enjoyed a near-monopoly on the gum market in the U.S. And even now, as it struggles with new competition from candy juggernaut Cadbury in North America, Wrigley is still benefiting from strong demand overseas.

The company may be losing market share domestically, but the Middle East, Europe, and Asia (especially China) is where the growth is. Domestic sales were flat in the last quarter, but sales to Europe and the Middle East grew 26% in 2007, while Asian sales grew 20%. International markets accounted for 68% of Wrigley's total sales.

Analyst Alexia Howard of Sanford C. Bernstein & Co. said she's worried about the increased competition from Cadbury. But she also said Wrigley consistently produces a steady stream of cash. So it should be able to comfortably pay a dividend -- and increase it -- for the foreseeable future.

As such, Wrigley's dividend yield of 2.3% is as refreshing as a stick of Doublemint. Plus, the dividend has grown by an average of about 13% over the past five years. Now that's some juicy fruit for investors.