You Can Never Be Too Safe

The hits keep on coming.

The ADP report was an unqualified disaster and we had still more large layoff announcements this morning. New announcements of global fraud joined the ongoing Madoff circus to undermine investor confidence in global financial markets. The deficit announcements from the Congressional Budget Office are mind numbing. Unrest continues in the Middle East. Russia turned off the gas to Europe and delinquent consumer loan payment hit an all time high.

With the exception of the Monsanto (MON - commentary - Cramer's Take), I really do not see any happy news right now. If I wasn't an avowed insomniac, I would just go back to bed.

None of this bodes well for the stock market in the weeks and months ahead. The bulls have vastly overestimated the speed with which the many versions of bailout funding will reverse negative trends, creating an enormous dilemma for investors. Treasury yields are too low and prices are likely to fall in the face of bond issuance to pay for all these programs and fund the trillion-dollar-plus deficit. Corporate bonds have moved up sharply already -- the risks of junk are far too high right now.

All week I have been trying to focus on areas where investors might find situations that would allow them to earn a return and reduce risks. Dividend payers with no debt and the cheap dividend stocks are a decent alternative. Today I want to look at a group of stocks for the most conservative among us to take shelter from the storm.

I created a screen that hopefully takes advantage of the steep drop the stock market has already experienced, but there is no guarantee that these stocks won't go down in additional market selloffs. You will, however, have a stream of dividends to offset the damage and the security of knowing that these companies are rock-solid corporations that should survive the malaise.

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At the time of publication, Melvin had no positions in the stocks mentioned, although positions may change at any time.

Tim Melvin is a writer from Stevensville, Maryland, who spent 20 years a stockbroker, the last 15 as a Vice President of Investments with a regional firm in the Mid Atlantic area. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Melvin appreciates your feedback; click here to send him an email.