High Yield Stocks as Recommended By Micahel Sivy

Written by The Dividend Guy on December 15, 2007

Michael Sivy

Is now the time to buy financial stocks with big dividend yields? I am not totally sure of the answer to this question, but one of my favorite authors gave some input on it. I am a big fan of Michael Sivy over at Money.com and his recent article titled, High-yield stocks for retirement provides some interesting comments. Here are some of the things that I found very interesting in the article.

That’s because several key groups of equities, especially the blue-chip financials that have been taking a beating of late, are so depressed that they’re offering yields not seen since the end of the bear market. At the same time, other stocks that have always paid rich dividends are becoming more attractively priced.

Over the next several months, therefore, you’ll have the chance to construct a safe, diversified retirement portfolio of blue-chip stocks paying out 4 percent in dividends.

My comments: I share the same viewpoint - although it may appear that things are really bad and we may in fact see things go down further from where we are now, this is the time to buy in the market. As long as you are focused long-term (5 to 10 years plus) then these types of markets can be just the thing to boost those portfolio returns.

In reference to a choppy market that provides sketchy returns from share price growth:

A better strategy is to rely on income stocks. With a prudent, high-yielding equity portfolio, you won’t have to worry about falling behind inflation. Nor will you have to care how the market performs, since you won’t have to sell stock each year to pay the bills. You can simply live on the income your portfolio throws off.

My comments: This is exactly why I love dividend stocks. Built within a solid asset allocation, they provide that boost a portfolio needs by throwing off cash flow which can be withdrawn or reinvested.

On how to invest:

If you want to put together a portfolio of high yielders, you may be smart to build slowly. The market slump that has pushed share prices down (and yields up) may not be over.

What to do now: In uncertain times it’s important to make sure your portfolio is well diversified. The simplest step to take now is to buy the S&P Dividend SPDR (Charts), an ETF that spreads its bets among 52 stocks.

What makes this fund so attractive is that it tracks the S&P High Yield Dividend Aristocrats index, an elite group of stocks that have steadily increased their payouts over the past quarter-century. These include blue chips like Consolidated Edison (Charts, Fortune 500) and Coca-Cola (Charts, Fortune 500).

My comments: A diversified approach that pays dividends. This is a good way to build a core component of your portfolio and then supplement with additional dividend growth stocks that you have selected.

I beleive this is good advice once again from Sivy. It is something the average investor can implement. Just remember to build a proper asset allocation.

(Photo Credit: Money.com)


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5 Comments so far

  1. karljohn » High Yield Stocks as Recommended By Micahel Sivy December 15, 2007 9:54 am

    […] Check it out! While looking through the blogosphere we stumbled on an interesting post today.Here’s a quick excerptHigh Yield Stocks as Recommended By Micahel Sivy Written by The Dividend Guy on December 15, 2007 Be the First to Comment » Is now the time to buy financial stocks with big dividend yields? I am not totally sure of the answer to this question, but one of my favorite authors gave some input on it. I am a big fan of Michael Sivy over at Money.com and his recent article titled, High-yield stocks for retirement provides some interesting comments. Here are some of the things that I found very […]

  2. Jake December 15, 2007 10:05 am

    Good article. I also believe in real estate investment trusts that he mentions in the article. They pay fairly large dividends and they protect you from inflation. The common misconception about REITs is that they all follow the real estate market. This is just not so. Each REIT focuses on its own type of real estate which could be apartments, storage, warehouses, etc.

  3. Help and Advice » Blog Archive » High Yield Stocks as Recommended By Micahel Sivy December 15, 2007 9:12 pm

    […] Read the rest of this great post here […]

  4. Dividends4Life December 16, 2007 7:51 am

    As to the question, “Is now the time to buy financial stocks with big dividend yields?”, this year is better than last year (assuming no dividend cut). The tricky question is will next year be better than this year. Predicting the bottom is always problamatic, so I don’t bother even trying. I will keep buying adding financials as long as I can reasonably stretch my asset allocation to allo it.

    Best Wishes,
    D4L

  5. Aaron December 16, 2007 10:17 am

    I think as long as you are selective it is a good time to buy some bank stocks with nice dividends. You have to differentiate though. I like BAC, WFC, JPM, WB, etc.. but don’t want anything to do with WM, CFC, etc.

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