Tuesday, April 13, 2010

Looking for high-yield dividend stocks for my IRA

Shopping for high-yield dividends stocks has become my new pasttime these past several weeks as I update my short- and long-term retirement goals. With markets only lately back to levels of three years ago those of us close to or in retirement have lost a lot of financial ground. A comfortable retirement became a bit more iffy and consfidence in upward stock price growth dwindled.
So with these exerpiences burned into my mind, I took a hard look at my Individual Retirement Account with its collection of some 12  mostly growth stocks offering scant dividend return. At 63, I have seven years before current tax law requires me to start taking money out of this IRA. So the goal is to build as much tax-free worth as possible until then. But growth-only hasn't been that successful. For every winner (Washington Group, now URS), I've had losers (PMI, the mortgage insurance company, and Zumiez (ZUMZ), the youth apparel retail chain. Over all, my IRA has made a bit of a comeback in the past 12 months with IBM (IBM), Microsoft (MSFT) and Stryker (SYK) among the better performers. But like many people who are near retirement or adjusting to retirement, I now believe that stocks with high yield dividends should be a bigger part of my portfolio, especially because interest rates on certificates of deposits and other safer investments likely won't turn upward for another year as the economy recovers and the Fed begins to ratchet up loan interest rates. With all this in mind, I searched out some high-yield stocks.
Here's what I found.
- Pfizer. Even though the big drug company has taken a beating on stock price over the past three years, the company's 4-percent-plus dividend continues to look good. So I'm holding onto Pfizer (PFE).
- Duke Energy. Energy stocks in general offer higher dividend yields. Consolidated Edison (ED) at 5.3 percent and Duke (DUK) at 6 percent yield income more than five-times the current inflation rate of less than 1 percent a year. I went with Duke because it has a broader mix of business than does Consolidated Edison.
- Verizon. Everyone seems to know about Verizon with its 6 percent dividend. The communications company has a range of business tied to the growing and diversifying wireless market that look promising. So Verizon's stock price at $30 a share also has some appeal.
- Johnson & Johnson. This diversified retail giant offers a 3 percent dividend rate and upside potential on its stock price. I'm holding on to that one.
So I called my broker today and sold IBM near its 52-week high at $129 a share and URS, which bought Washington Group a couple of years ago, at $51 a share. I bought Verizon and Duke.
Like all my stock investments this latest move is a crap shoot. I try to inform myself, read up on what's happening with global and regional economies, look at price values and analyze stock performance at a couple of my favorite Web sites.... http://www.wsj.com/ and Fidelity Investments at http://www.fidelity.com/.
My bottom line mantra is that nobody cares about my money more than I do. And even if I make mistakes, they're my mistakes.

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