Dividends Don't Lie

Had you bought this company during the 2008 low price of $10, the then-$0.75 dividend was a yield of over 7%. Today you would be collecting a yield of nearly 10% a year and sitting on a gain of around 200%. You won't get anything like that going forward, but you will get a growing dividend from the largest toy company in the U.S. As long as there are children, birthdays and Christmas, Mattel will be just fine.

H.J. Heinz (HNZ) is another solid dividend play today. It yields 3.6%, and that makes it the highest-yielding big-cap food company stock. You can rest assured the dividend is not going away, since products such as ketchup, soup and Worcestershire sauce generate the cash flow. And given how valuable dividends are today, the stock price will get tremendous support if it starts to slip.

I'm also keeping a close eye on Dell (DELL), since the shares continue to slide lower and lower, in the process creating a 3.3% yield. The dividend is new for Dell, so I'd bet the company has no intention of taking it away. In fact, seeing as how founder and CEO Michael Dell has bought $500 million worth of shares for himself, he has every incentive to boost the payout.

Dividend-paying stocks are cash-flow-producing companies. In the long run, value is created by cash-flow growth, and the perennial dividend-paying companies have demonstrated that they can generate cash flow and pay dividends in any environment.

EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

« First ‹ Previous 1 2