NEW YORK ( TheStreet) -- Owning stocks that pay super-sized dividends when the market is trending higher is a powerful way to get free portfolio insurance in case the market takes a breather.Regardless of your stocks are gaining value, you get paid to own them. Receive enough dividends and your stocks are essentially free cash-disbursing ATMs once a quarter.
Pfizer (PFE - Get Report) Background: Pfizer, a biopharmaceutical company, engages in the discovery, development, manufacture, and sale of medicines for people and animals worldwide. Price To Book: 2.4 Earnings Payout Percentage: 25% Shareholders receive 96 cents annually in dividend payments. That places the yield about 3.3%; in relation to a shrinking payout percentage, it is one of the best yields you can find on Wall Street. Pfizer has plenty of competitors in the space. One that particularly stands out is Merck (MRK) right now. I would wait for a buying dip in price to enter, for example, under $48. Also, while Merck pays a slightly higher dividend yield, the payout percentage is expected to top 50%, even with expected earnings to grow to $3.68. Pfizer and Merck are widely held, and there is a compelling reason for it -- they both deliver to shareholders. Pfizer is my first choice, but Merck deserves an honorable mention, especially for investors that already own Pfizer and want diversification. Pfizer's shares are up about 14% from a year ago, and the average analyst price target is $31.59. I don't put a tremendous amount of weight on analysts' price targets but it is one more factor to consider. There's almost zero desire by short-sellers to move against this stock. Short interest hardly moves the needle with only 0.9% of the float. Never underestimate how informative short interest is. If the smartest guys in the room aren't excited about placing a bet the stock is overpriced, it probably isn't. PFE Payout Ratio TTM data by YCharts