This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

4 Rising High-Yield Dividend Stocks to Buy on Your Road to Wealth

NEW YORK (TheStreet) -- Dividend stocks are your path to wealth building. More important, they're the key to maintaining your mental fortitude when the market is in a downturn. If you buy a non-dividend paying stock, you're only ability to profit is when you sell.

The problem faced by most investors is that the time between buying and selling is often filled with peril. I'll use the exchange-traded fund index SPDR S&P 500 (SPY) to illustrate. The SPY appreciated over 20% during the last year. On Monday, the index traded at a new all-time high.

Fueled by our currently raging bull market, both Apple (AAPL - Get Report) and Adobe (ADBE) soared over 50% in the last 12 months. Apple features a 2% dividend yield and Adobe pays zero. Both are well-known technology stocks, but what happens if Monday's market high is the top?

A 30% market retracement is common, even in a bull market. If you buy Apple at the top at least, you collect a better rate than the bank pays. Also, the further Apple declines, the more attractive it becomes for yield seeking investors. On the other hand, if Adobe shares decline, shareholders have nothing to look forward to other than unrealized losses and possibly a stop-loss at the worst possible time.

That's why dividend-paying stocks not only treat your portfolio right, they make investing palatable for the risk averse. Want more proof? Take a look at my suggestions a year ago this month for DuPont (DD), Wells Fargo (WFC), and General Electric (GE). The group outperformed the market and shareholders received dividend checks while experiencing lower volatility.

Here are four to consider:

MSFT Dividend Yield (TTM) Chart

Background: Microsoft (MSFT - Get Report) develops, licenses, and supports a range of software products and services. The company's shares are liquid and trade an average of 23 million shares per day and the company has a market cap of $339 billion.

52-Week Range: $30.84 to $41.66

Price To Book: 3.9

Forward Estimated Earnings Payout Percentage: 38%

I can't say enough good things about Microsoft. I probably have over a dozen articles touting its bull thesis and why it's such a value. In the last 10 years, revenue and profit went on a one-way journey upward while the market more or less shrugged its shoulders.

The only declining metric is the number of outstanding shares. to under 8.3 billion shares this year from over 10.7 billion shares in 2005. The traditional software model is changing, however; the company is successfully transitioning into a leading cloud computing services provider and video game platform maker.  

Microsoft pays $1.12 for an effective 2.7% yield. The next ex-dividend date isn't until August, so if you sit on your hands and wait for a market drop you can probably catch it below $40 and capture a slightly higher yield. I would forget about it at that point and just let the dividends continue rolling in.

MSFT Shares Outstanding Chart

 

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $128.46 0.00%
CSCO $29.51 0.00%
MSFT $43.85 0.00%
T $34.56 0.00%
FB $78.97 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs