Stocks With Solid Dividends

With bond yields expected to hold near record lows for an "extended period," experts say investors should turn toward dividend stocks to get better returns. "Interest rates are very low, and the Federal Reserve has made it clear that it wants to keep it that way," said Robert Johnson, Morningstar's director of economic analysis at the firm's annual investment conference in Chicago. "But inflation is running at an annualized rate of about 3.5%, so anyone invested in short-term Treasuries is losing money."

For higher real returns and relatively low risk, stocks that pay dividends are a solid bet in the current trading environment, said Josh Peters, an equity strategist at Morningstar. "P&G doesn't get much credit for its exposure to emerging markets," said Peters, adding that the company's growth allowed it to boost its dividend by a healthy 9.5% in fiscal 2010, a trend which is likely to continue. Peters also likes Abbott Laboratories (ABT, Fortune 500) and American Electric Power (AEP, Fortune 500).

Source: CNN Money

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