Wednesday, March 20, 2019

3 Higher Yielding, Lower Risk Stocks To Perk Up Your Dividend Income

As a society we have grown accustom to wanting it all, including our investments. Specifically, many income investors want both high yield and low risk. A dividend stock with a high yield doesn’t mean much if the dividend is cut or eliminated, and the stock price declines significantly.  So can an investor find both higher yields and lower risks?

If your goal is to accumulate wealth for a comfortable retirement, then there is no risk-free path. Throughout time every angle has been tried and failed. Inherently, individual stocks will carry higher risk due to the lack of diversification when evaluated on a stand-alone basis.

Sometimes it is desirable to accept higher risk for a higher yield. Other times we may be accepting higher risk and are not being adequately compensated for the additional risk.

You can mitigate some of this risk by selecting solid dividend paying companies with a track record of increasing their dividends each year. Consider this list of higher-yielding (3.5% or greater), lower-risk (between 1 and 2, with 1.00 being the lowest risk) dividend stocks:

Community Trust Bank Corp. (CTBI) owns and operates Community Trust Bank, Inc., which provides commercial banking services in Kentucky, Tennessee and West Virginia; and a trust company. The company has paid a cash dividend to shareholders every year since 1988 and has increased its dividend payments for 39 consecutive years.
Yield: 3.5% | Risk #: 1.00

Bunge Limited (BG) is a large, geographically diverse agribusiness and food company. The company has paid a cash dividend to shareholders every year since 1942 and has increased its dividend payments for 34 consecutive years.
Yield: 3.8% | Risk #: 1.00

Mercury General Corp. (MCY), operating primarily in California, writes a full line of automobile coverage for all classifications of risk. The company has paid a cash dividend to shareholders every year since 1986 and has increased its dividend payments for 30 consecutive years.
Yield: 4.9% | Risk #: 1.00

For a detailed explanation of how I calculate risk, see Finding Low Risk Dividend Stocks.

A good investor will determine the desired outcome and invest in a way to achieve their goal with minimal risk. When it comes to investing your money, there is no escaping risk. Even investing in risk-free Treasuries, carries risk - you risk losing to inflation and running out of money before you run out of life.

Full Disclosure: Long MCY,

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Tags: CTBI, BG, MCY,