This Diverse Income Portfolio Sports an Average Dividend Yield of 7.5%

What is it about dividend-paying companies that makes them so attractive to the long-term and retired investor? To begin with, dividends act as a beacon that lets investors and retirees know that a company's business model is so fundamentally sound today that it can afford to share a percentage of profits with its shareholders. Secondly, dividends help ease the pain during stock market corrections and bear markets. They don't erase the red arrows, but they certainly help hedge your losses a bit. Finally, and most importantly, dividends can be reinvested back into more shares of stock, allowing your position and future dividends to compound. This last point is where substantial wealth can be created over time.

Let's have a look at which five companies make the cut: The technology sector isn't known for its dividends, but Seagate Technology (NASDAQ:STX) is among the best exceptions. GlaxoSmithKline (NYSE:GSK) hasn't had the easiest go of things over the past couple of years due to the imminent emergence of a generic version of inhaled COPD and asthma blockbuster Advair. Up next, we'll look at a company that's been driving over the competition: General Motors (NYSE:GM). Annaly Capital Management (NYSE:NLY) may take a lot of flak as a mortgage real estate investment trust (mREIT), but it's been among the highest-yielding dividend stocks over the past decade, and it's likely to remain so moving forward. Last, but not least, we have Holly Energy Partners (NYSE:HEP), a midstream oil transportation, terminaling, and storage company, which also happens to be a subsidiary of HollyFrontier.

Source: Motley Fool

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