High Yield/Low Dividend Growth: When investors first consider dividend investing, High Yield is where they usually go first. I guess it is human nature to want it now and want a lot of it. Unfortunately, high yield stocks often carry higher than average risk - there is usually a reason that the stock yield is higher than average. It could be because the company is in a limited growth industry, is in a volatile industry, experienced recent financial problems and its share price has fallen, or shareholders perceive future financial problems. I have set aside a small portion of my portfolio to invest in these types of stocks. Examples of these stocks would include:
- First Industrial Realty, Inc. (FR) - 7/28/08 Mid-day Yield: 10.7%/Growth 3.4%
- Consolidated Edison (ED) - 7/28/08 Mid-day Yield: 6.0%/Growth 1.0%
- AFLAC Inc (AFL) - 7/28/08 Mid-day Yield: 1.8%/Growth 22.3%
- Canadian National Railway Co. (CNI) - 7/28/08 Mid-day Yield: 1.7%/Growth 18.0%
- General Electric (GE) - 7/28/08 Mid-day Yield: 4.3%/Growth 12.4%
- U.S. Bancorp (USB) - 7/28/08 Mid-day Yield: 5.9%/Growth 12.8%
The dividend growth rates quoted above are the average annual rates from 1998-2007.
Full Disclosure: At the time of this writing I was long in FR, ED, AFL, CNI, GE and USB.
(Photo: sanja gjenero)