The best dividend stocks to invest in for 2010 pay secure dividends that the company can well afford. The payouts of the best dividend stocks are likely to grow somewhat with time too, because the underlying company’s prospects are likely to remain bright or even improve. Finally, the best dividend stocks of 2010 may provide capital gains as well, if they are undervalued. Even if the market goes down, these stocks are likely to hold their value, because their businesses, and therefore their dividends, are relatively secure.
Here are some ideas of the best dividend stocks for the rest of 2010 and beyond. You will want to check them out for yourself before you invest so your chosen stocks fit your precise circumstances, risk tolerance, and goals.
Utilities
Utility stocks are a dividend standby. People will always pay for light and heat, and probably a phone as well. Utilities borrow heavily, so low interest rates help them, though rising interest rates might hurt a utility, by raising the cost of doing business, and by competing for investor dollars when bond yields improve.
NiSource, NI, pays a dividend that amounts to5.23 percent. It’s a public utility that provides natural gas from the Gulf Coast through the Midwest to New England. It also provides electricity in some areas and has some interests in fuel cells and real estate.
Ameren, AEE, pays a dividend of 5.35 percent, as of the beginning of October 2010. It provides natural gas and electricity in Missouri, Illinois, and Iowa, but most of its customers are in the St. Louis area.
Verizon, VZ, the phone company, is partly stuck in the old world of landlines, though it does cells too. It pays a dividend yield of 5.93 as of October 2010, which indicates investor uncertainty about its prospects. Providing connections for Apple products, though, might help the business. Either way, it’s one of the best dividend stocks for yield.
Healthcare
Healthcare companies have looked like a government target, driving their stock prices down and raising yields. Some investors fear these companies will run out of patented products too, which would hurt their profits.
Pfizer, PFE, sells Lipitor, Viagra, Spiriva, and Aricept. These drugs are likely to be more heavily used as the population ages. Problems could arise though, when patents run out and generic versions become available, or when competitors market drugs that solve the same problems. Pfizer yields about 4.23 percent now, and the dividend looks safe.
Merck, Johnson and Johnson, Lilly, and Novartis might also be among the best dividend stocks for yield and safety.
Food
Everybody’s got to eat. That’s the theory behind food stocks.
McDonalds, MCD, is trying to be a coffee shop, and people seem to like its brew. It’s still the place for burgers and fries too, and yields about 3.5 percent, nice for a recession-resistant stock with hopes for growth in China. Close to half its profits now come from Europe, so it benefits if the dollar stays weak, and loses if it strengthens.
Heinz, Kraft, and Unilever are all yielding nearly four percent. They are not in exciting businesses, but their prospects are not scary, either, so they’re worth researching.
Companies with too high a payout might not provide the best dividend stocks. Any yield over ten percent certainly bears watching. If they cut the dividend, the stock will certainly dump. Huge yields may have ugly tax consequences too, starting next year.
If you are willing to pay close attention to your stocks every day, and if you can truly tolerate huge ups and downs, then look for higher yields, or for volatile stocks that often don’t even have yields. Otherwise, stay with the slow and steady stocks, the ones that crank out unflashy dividends. They’re the best dividend stocks for you. Just like the tortoise in the fable, you may come out ahead in the end.