TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

Speculators trying to identify the stock market's next turn are likely to get burned.

The economy probably is changing from contraction to slow growth, and investors should tailor their strategy accordingly. In a range-bound market -- the S&P 500 Index has been stuck around 900 for two months -- buy undervalued stocks with stable dividends. That strategy lacks excitement, but offers strong risk-adjusted returns.

TheStreet.com Ratings

High-quality companies are selling at discounts to the equity market and their peer groups. The following five companies, after being put through a quantitative screener, may offer outsized returns when others rise and fall with a narrow band. Each has average daily trading volume of more than 2 million shares, a 2009 price-to-earnings ratio of less than 13, a 2010 P/E ratio of under 12 and a dividend yield of more than 4.5%. By purchasing such stocks, you earn a gain from dividends. And any price declines present the opportunity to dollar-cost average and accumulate shares with a higher yield. If you can spare the cash, reinvesting dividends is another way to fertilize your investment.

This is a proven strategy if you have a long-term holding period and are able to select companies that have stable businesses. With this strategy, your stream of income won't dissipate if the economy sours.

Each stock receives a "buy" recommendation from TheStreet.com Ratings' proprietary model.

Verizon ( VZ) is the largest U.S. wireless-service provider. First-quarter revenue rose 12% to $26.6 billion as net income inched up 0.2% to $1.65 billion and earnings per share climbed 1.7% to 58 cents. The company is compensating for a peak in U.S. cellphone penetration by increasing its share of the growing netbook and smartphone markets. If AT&T ( T) loses its exclusive deal with Apple ( AAPL), Verizon is poised for a jump.

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