Stocks that have a good dividend yield not only give you another path to increasing your assets, but also work well when you reinvest your dividends after each payout into the purchase of more shares. This continually increases the worth of your overall portfolio, which is why many investment advisors recommend diversifying this way. Many slower-growing blue chip stocks pay good dividends and have a solid track record. Some stocks pay great dividends to cover for poor price performance, though, so it is critical that you choose your dividend plays very carefully. Here are three that look like great plays in our current market.
Vodafone Group Plc (ADR) (NASDAQ:VOD)
Across Europe, Vodafone Group Plc (ADR) (NASDAQ:VOD) is one of the biggest cell phone carriers. It is a household name, similar to Verizon Communications Inc. (NYSE:VZ) in the U.S. You can’t get off a plane anywhere in Europe without having your eyes assaulted by Vodafone Group Plc (ADR) (NASDAQ:VOD) billboards – good thing they are tastefully done. Looking at Vodafone Group Plc (ADR) (NASDAQ:VOD)’s long-term dividend payouts, they have certainly been as reliable as Old Faithful. And analyst consensus is that Vodafone Group Plc (ADR) (NASDAQ:VOD) is a Strong Buy. One reason that Vodafone Group Plc (ADR) (NASDAQ:VOD) is such an attractive bet is because of its considerable take in U.S.-based Verizon Communications Inc. (NYSE:VZ) Wireless. This stake, worth $106 to $136 billion, is considerable and is driving rumors that Vodafone and Verizon Communications Inc. (NYSE:VZ) Wireless could merge. Another possible scenario is that Verizon will acquire Vodafone’s stake in Verizon Communications Inc. (NYSE:VZ) Wireless in a move to unify the company. In any event, this speculation has driven Vodafone’s price close to the 52-week high of $30.80, but the upwards movement doesn’t show signs of stopping. A price target of over $33 is a realistic goal for this stock. Add this to a dividend yield of over 5%, and you have a winning pick.
An even higher dividend yield, 7.58%, is offered to shareholders of Suburban Propane Partners LP (NYSE:SPH). Most Fools are bullish on this energy stock; it carries a CAPS rating of four out of five and has many positive comments. Why? Aside from the strong dividend payout, Fools know that the recent weather tragedies mean that many Americans are going to stock up on propane and alternatives to traditional electricity to prepare for the inevitable.