Three Dividend Stocks Your Portfolio Is Begging You to Buy

NEW YORK (TheStreet) -- With the market trading near all-time highs, picking winners is about as difficult as shooting fish in a barrel. Everyone is once again a stock-picking genius.

Two things never change, though: People get overly confident in bull markets, and every bull market is followed by a bear market. As an investor, you want to position your portfolio to win in both bull and bear markets.

One category of stocks that stand the test of time is high-yield dividend stocks that are not "dividend traps." A dividend trap stock is one that is attractive because the smart money is dumping the shares as quickly as they can. Buying a high yield dividend stock that is likely to reduce or halt dividends is like picking up nickels in front of a steamroller.

Here are five stocks I think you want to include in your portfolio. They are the stocks that you can profit from today, and should stay relatively strong if the market retraces some of the recent gains.

GE Dividend Yield Chart GE Dividend Yield data by YCharts

General Electric ( GE)

Background: General Electric is one of the largest and most diversified industrial corporations in the world. GE is also an original member of the Dow Industrial average.

Earnings Payout Percentage: 51%

I've been bullish on General Electric for several years now. The company makes it easy to remain bullish because the stock continues higher while the income and balance sheets grow at a comparable rate.

Shares are modestly higher from about a month ago, and investors receive 76 cents annually in dividend payments for a yield of 3.1%. From a year ago, the shares are up over 20%, and analysts are calling for a price target of $25.85. I see no reason why $30 is unattainable within the next two years.

At $30, General Electric will still be well off the highs of 2007 and any argument that the shares are overvalued quickly dissipate after considering only 0.7% of the float is shorted.

The key to buying General Electric is to wait for three to five down days in a row. Wednesday provides the first opportunity after shares declined since Thursday last week.

GE Payout Ratio TTM Chart GE Payout Ratio TTM data by YCharts

INTC Dividend Yield Chart INTC Dividend Yield data by YCharts

Intel ( INTC)

Background: Intel designs, manufactures, and sells integrated digital technology platforms primarily in the Asia-Pacific, the Americas, Europe, and Japan.

Price To Book: 2.2

Earnings Payout Percentage: 49%

Intel is once again on my radar after the recent dip in price. The yield is quickly approaching 4%, and that should be the metric to stick your toe into the waters. I like selling covered calls against Intel when the price declines enough to pay a 4% yield.

The real strong support is under $20, but it's questionable if you will find an opportunity to buy shares that low again. If Intel does come down that much, it's probably time to load up again with two scoops. The average analyst target price for Intel is $23.69.

An area to monitor is the short interest. Short-sellers are what I consider the smart money, and if short-sellers get excited about a stock, I can lose my enthusiasm. With short interest above 4%, but below 5%, shareholders may want to scrutinize changes in case short sellers turn up the heat further. Otherwise, the prevailing 4.9% of the float short is not (yet) a serious concern.

INTC Payout Ratio TTM Chart INTC Payout Ratio TTM data by YCharts

T Dividend Yield Chart T Dividend Yield data by YCharts

AT&T ( T)

Background: AT&T is a communications company. Ma Bell provides landline phone service, TV content, internet, mobile phone services and Yellowpages.com.

Price To Book: 2.2

Earnings Payout Percentage: 60%

I recently wrote "AT&T Customer Service: From the Outhouse to the Penthouse", an article about the customer service transformation that can happen even in companies that start from zero.

Normally, I wouldn't consider a stock with a payout over 50%. They normally get filtered out before I even take a glance. The difference with AT&T is the stability of earnings. The company resembles an old-school, dividend-paying public utility than a tech giant.

The relative earnings safety and improving customer satisfaction provide the impetus for entry. AT&T is once again a diamond in the rough. With a 5% yield, investors have plenty of motivation to sit on their hands and wait for the shares to trend higher.

Shares have been under considerable price pressure lately, falling 5% in the last year. The average analyst target price for AT&T is $37.52. Short sellers are in (cough) short supply, and only 1.5% of the float is shorted. That means very few hedge funds are willing to bet the stock will fall, or that the dividend is about to get cut.

T Payout Ratio TTM Chart T Payout Ratio TTM data by YCharts

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Robert Weinstein is an active trader focusing on the psychological importance of risk mitigation, emotion and financial behavior of market participants. Robert co-founded the investing blog StockSaints, where he writes a journal about his trading activity and experiences.

In addition to TheStreet, Robert also contributes to Real Money Pro, providing real-time trading ideas for stocks, options and futures.

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