Forget C.D.’s, These Stocks Get Real Returns

Anyone that is investing in Certificate of Deposits (C.D.’s) can tell you that the returns are horrible right now. Banks are currently offering less than 1% to 1.5% depending on the C.D. maturity date. This rate of return is not even keeping up with inflation so your actually losing real purchasing power.

I realize that C.D.’s provide safety but at what price? Your guaranteed to lose money at the current rates they are paying. A wiser move may be to invest in some steady earning companies that pay a nice fat dividend instead. In addition to the much higher income you also get the possibility of appreciation in the share price.

Even if the share price drops your income should not be effected and many of the smarter investors look to buy more shares at a discount. There are some very good companies that pay 5% or higher dividends including:

1. Duke Energy (DUK) – This is an energy company operating in the U.S. under three sectors, franchised gas and electric, commercial power, and international energy. The stock is trading at $18.83/share and has an annual dividend of $1.00 (5.3% yield).

2. Elli Lilly – (LLY) – This is a pharmaceutical company that develops, manufactures, and sells pharmaceutical products worldwide. The stock is trading at $37.53/share and has an annual dividend of $1.96 (5.2% yield).

3. Vodaphone (VOD) – Vodafone Group plc provides mobile communications in Europe, Africa, the Asia Pacific, the Middle East, and the United States. The stock is trading at $26.72/share and has an annual dividend of $1.92 (7.3% yield).

4. Starwood Property Trust (STWD)– This is a real estate investment trust, primarily focuses on originating, investing in, financing, and managing commercial mortgage loans. The stock is trading at $20.51/share and has an annual dividend of $1.76 (8.8% yield).

Buying Stocks For Income

If your looking for income from stocks you are going to want to be investing in high dividend paying stocks over 4%. Since the yields and P/E ratios and share price move so much it’s important to get current and up to date information.

I subscribe to a monthly dividend newsletter that list all the dividend paying stock under $10, the top 100 highest paying dividend stocks, and a large range of other statistics. This is good if your a bargain hunter like I am. I like to buy these quality companies at a discount, its like buying food on sale at a grocery store only you make money instead of spending it.

For $19 a month you get these up to date dividend reports that can make you a great deal of money if you use them to time your investments like I do. Here is the monthly newsletter and report. I highly recommend this report if your serious about investing in income producing stocks.

1 Dividend Stock You Need

Every income investor should have a few core holdings of investments that provide steady income and growth.

Since many high yielding dividend stocks can be risky due to the possibility of dividend cuts and deflating share price its good to have a true pillar of stability.

Owning land is perhaps one of the best long term investments but the problem is managing to pay the taxes on it while you hold it to develop or sell it.

One company has creating vacant land income down to a science.

Plum Creek Timber (PCL) is a real estate investment trust (REIT) that owns and manages timberland throughout the U.S.

It products include lumber, plywood, fiberboard, and related by products such as wood chips.

The comapnt than sells its products to retailers, home construction companies, and industrial companies.

In addition to the timber they also extract minerals and natural gas, and oil.  It also operates communication and transportation businesses to a lesser extent.

It also owns over 7 million acres of land and is the largest landhilder in the U.S.

Due to the recent downturn in the economy they have focused on creating income from the sale of timber and held off on major land sales.

Since the company is a REIT it is not subject to Federal Income Taxes and ditsributes over 90% of its income to shareholders in the form of a dividend.

Their dividend is paying 4.68% or $1.68/annually while its shares are selling at $35.89/share.

Although the dividend is not huge it is stable and above average and the share price has the ability to take offf once the economy rebounds and they sell their prime land.

Dividend Stocks

Stocks are one of the best ways to make passive income however it requires a sizeable amount of money invested before you can live on the dividend income.

Some stocks have high yeilding dividends due to poor stock performance and will most definitley have to cut their dividend to survive.

Most stocks with a dividend yield above 9% fit into this category although not all of them.

Frontier Communications (FTR) is yielding 12.7% and selling at $7.86/share as of 05/18/2010.

While its dividend is abnormally high it is also growing fast.  It has a monopoly in rural areas where it targets small and medium sized towns.  It is mainly a landline phone company but has expanded into other communication services.

Penn West Energy Trust (PWE) is yielding 9.3% and selling at $19.37/share. 

A open ended investment trust that operates in Canada it focuses on aquiring and developing petroleum and natural gas property and assets.

What I like about this compnay is in potential to generate income for many years since it has proven oil reserves of 750 million barrels and working interests in 26,440 gross oil and gas wells.

It is a proven company that can afford to pay a high dividend and with their proven reserves makes a nice long term investment.

Both of these companies prove that although most stocks that pay very high dividends are in trouble and will have to cut their dividends, some companies have the ability to maintain high dividends.