Symbol Company Price Yield Small Dog
NYSE / NASDAQ The Dow stocks ranked by yield on 12/29/06

PFE Pfizer 25.90 4.48% Yes
VZ Verizon 37.24 4.35% Yes
MO Altria 85.82 4.01% No
T AT&T 35.75 3.97% Yes
C Citigroup 55.70 3.52% No
MRK Merck 43.60 3.49% No
GM General Motors 30.72 3.26% Yes
DD DuPont 48.71 3.04% No
GE General Electric 37.21 3.01% Yes
JPM JP Morgan Chase 48.30 2.82% No

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Year-to-date performance of the high dividend paying stocks that make up the Dogs of the Dow plus the rest of the Dow 30 index.

Symbol Company Price Yield Price Yield YTD % Chg
NYSE / NASDAQ

PFE Pfizer 25.90 4.48% 26.80 4.33% 3.5%
VZ Verizon 37.24 4.35% 38.17 4.24% 2.5%
MO Altria 85.82 4.01% 86.56 3.97% 0.9%
T AT&T 35.75 3.97% 38.12 3.73% 6.6%
C Citigroup 55.70 3.52% 54.66 3.95% -1.9%
MRK Merck 43.60 3.49% 44.73 3.40% 2.6%
GM General Motors 30.72 3.26% 32.99 3.03% 7.4%
DD DuPont 48.71 3.04% 50.25 2.95% 3.2%
GE General Electric 37.21 3.01% 36.27 3.09% -2.5%
JPM JP Morgan Chase 48.30 2.82% 50.93 2.67% 5.4%
KO Coca-Cola 48.25 2.57% 48.24 2.57% 0.0%
MMM Minnesota Mining & Manufacturing 77.93 2.36% 73.87 0.00% -5.2%
JNJ Johnson & Johnson 66.02 2.27% 66.58 2.25% 0.8%
MCD McDonald's 44.33 2.26% 44.54 2.25% 0.5%
HD Home Depot 40.16 2.24% 40.83 2.20% 1.7%
HON Honeywell 45.24 2.01% 46.16 1.97% 2.0%
AA Alcoa 30.01 2.00% 32.44 2.10% 8.1%
INTC Intel 20.25 1.98% 21.23 2.12% 4.8%
CAT Caterpillar 61.33 1.96% 65.25 1.84% 6.4%
PG Procter & Gamble 64.27 1.93% 65.34 1.90% 1.7%
UTX United Technologies 62.52 1.70% 68.00 1.56% 8.8%
XOM ExxonMobil 76.63 1.67% 75.54 1.69% -1.4%
BA Boeing 88.84 1.58% 90.05 1.55% 1.4%
WMT Wal-Mart 46.18 1.45% 48.08 1.39% 4.1%
MSFT Microsoft 29.86 1.34% 30.19 1.32% 1.1%
IBM International Business Machines 97.15 1.24% 99.17 1.21% 2.1%
AXP American Express 60.67 0.99% 58.16 1.03% -4.1%
AIG American International Group 71.66 0.92% 69.07 0.96% -3.6%
DIS Disney 34.27 0.90% 35.18 0.88% 2.7%
HPQ Hewlett-Packard 41.19 0.78% 42.07 0.76% 2.1%

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In your search for solid dividend-paying companies, you will frequently encounter three special kinds of corporations. They have chosen to organize themselves under federal laws that allow them to avoid corporate taxation provided that they pay out, or distribute, the bulk of their profits to shareholders. For this reason, these companies appear frequently in lists of high-yielding dividend-payers. All three special forms of companies have ticker symbols, and their stocks trade just as other companies trade.

Here is a primer on these three special corporate forms:

Real Estate Investment Trusts (REITs)

REITs were created by Congress in 1960. They come in two flavors: Most REITs are essentially landlords, holding properties from office parks to apartments to shopping malls. A far smaller number of REITs are "mortgage REITs," involved in real estate financing.

To qualify as a REIT, a company must distribute at least 90 percent of its taxable income in the form of dividends. Historically, most of the return from REITs has come from these dividends, although many have delivered attractive price returns to boot.

REITs are the only practical way for most individuals to invest in residential and commercial real estate developments. Real estate is often considered to be a distinct asset class (beyond the "big three" of stocks, bonds, and cash), so REITs offer the investor some diversification benefits. Current dividend yields often are 5 to 8 percent or more, right out of the gate for new buyers.

Note, REIT dividends do not qualify for the 15 percent federal income tax rate on most dividends. They are taxed to the shareholder as ordinary income. That is because the earnings were not taxed at the corporation's level.

Master Limited Partnerships (MLPs)

MLPs are also a special form of structure. In fact, they are not corporations at all, but partnerships. By law, their activities are limited to the production, processing, and transport of natural resources, plus some operations in real estate.

MLPs appear mostly in the oil and gas industry. They provide small investors a way to participate in pipeline partnerships and other oil and gas operations that otherwise would not be possible. Because the shares trade, beyond the partnership distributions there is also the usual potential for capital gain or loss.

Every MLP has a general partner which manages and controls the partnership. Shareholders in MLPs (technically "unit holders") are limited partners in the enterprise. They own an interest in the assets of the business, which in turn entitles them to dividends and other distributions, and also to benefit from depreciation of the assets of the business.

Taxation of MLPs was established in 1987 by Congress. The partnership does not pay taxes itself, so the distributions sent to unit holders do not qualify for the federal 15 percent cap on dividend income. However, not all of the distribution sent each quarter to unit holders is a "dividend." Some of it is a return of the original capital invested. The returned capital, in effect, reduces the cost basis of the investment (as if the shareholder had spent less per share in the first place). Returned capital is not taxed in the year it is distributed, but it is taxed when the unit holder sells the shares. That is because there will appear to be more profit on the sale of the shares, since the returned capital over the years reduced the cost basis. So the returned capital is not, as is sometimes stated, non-taxable; rather the taxation is deferred. When you finally sell those shares, the taxation catches up to the capital returned over time.

Because of their unique structure and tax situation, MLPs must mail an IRS Schedule K-1 to each unit holder every year. This reports the unit holder's share of the partnership's taxable and non-taxable income, gain, loss, deduction, and credits. It is really not that difficult to deal with, and any competent tax preparer is familiar with K-1's.

Business Development Companies (BDCs)

BDC's were created by Congress in 1980 to help provide capital to small businesses. They have been much in the news lately, usually under the term "private equity," as there have been dozens of recent deals in which companies have been "taken private." That means that public companies-some of them quite large-have been bought in their entirety by private equity companies with huge amounts of capital at their disposal.

Many of these private equity deals have been made by companies which are truly private, but some of the private equity firms have themselves decided to go public, becoming BDCs. (Never mind that the size and nature of the resulting entity and its investments may be far outside the original purpose and spirit of the law.) When a private equity firm is itself public, that means that the individual investor has a chance to participate in "big deals" that would otherwise not be possible.

The law requires BDCs to at least annually distribute the bulk of their net investment income and capital gains to shareholders. Thus they often have attractive dividend yields. As with REITs, these dividends are not subject to the 15% cap on dividend tax rates for their recipients. And since the shares of BDCs trade, there is the potential for capital gain or loss associated with any public company.

Dave Van Knapp is the author of Sensible Stock Investing: How to Pick, Value, and Manage Stocks. Find out more about how to become a successful individual stock investor at => http://www.SensibleStocks.com Or go directly to the book on Amazon.com, where it has a 5-star rating from readers => http://www.amazon.com/gp/product/059539342X/sr=1-1/qid=1155381420/ref=sr_1_1/002-5852738-5260830?ie=UTF8&s=books

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Dividend is a crucial part for investors' investing return historically. According to Wikipedia, when dividend yield is high or rising, it is when investors' return among the greatest. For example, dividend yield of the Dow Jones Industrial Average plunged to a low of 3.2% during the market bubble of 1929 and rise to 15% during the stock market collapse of 1932.

I do not have a hard cold fact to back it up but let's just assume a historical average dividend yield of 3 %. Since the world war II, stock market index has returned investors 10.5 % return annually. That implies that dividend contributes to 28.6% of overall investors' return. Ignoring dividend will decrease your investing performance by that much, which can be devastating in the long run.

Having said that, what is the characteristics of stocks giving out dividend yield of more than 3 % ? One thing that can help is to find companies trading at below their fair value. The fair value of a common stock is when it is trading at around a P/E of 13.4. This means that a company trading at $ 13.40 would have to earn $ 1 annually. Assuming that it pays half of this profit as a form of dividend, you can then expect a dividend yield of ($ 0.50 divided by stock price $ 13.40 ) = 3.73 %.

For growth stocks trading at 50 times earnings, you can rest assured that they won't have pay dividend that yields 3% year in and year out. The reason is quite simple. If a company earns $ 1 while its stock price is trading at $ 50, the most dividend it would pay is $ 1. At $ 50, the dividend yield for that stock is a measly 2 %. Your dividend yield will actually be lower since most companies do not pay all of its profits in the form of dividend.

In summary, to boost your investing return by 28.6%, you need to find stocks trading at above average dividend yield of 3 %. You won't find these dividend payers at a company whose stock is trading at 50 times earnings. The reason is simple. Even when they are paying out all of their profits as dividends, their dividend yield is still less than what average stocks pay historically. To find stocks paying dividend yield of 3 %, you can start by buying companies trading at below fair value, which is defined as the stock trading at a forward Price/ Earning Ratio of 13.4, assuming a 0 % growth in earnings.

Would you want to boost your investing return by 28.6% in one simple swoop? Of course you do. It is like catching two birds with one stone. Finding stocks trading below fair value will enable you to extract capital gain as well as dividend payments.

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Dividend Real estate investing is a grand way to uphold your portfolio with the skill to run the company when directly buying shares from the company. The chief objective for dividend investing is as follows:

Objectives of triumphant dividend investing

The most important purpose of dividend real estate investing is to look forward for stock with least risk of dividend cuts and / or other off-putting events, and probability, which dividend would increase while you buy stock. When the dividend increases the yield on your original investment as well increases with the dividend Pay attention to take-home growth. Know whether a companies expectations earnings are headed up or down. Since dividends in due course come from earnings, dividends cannot really grow if earnings dent. Analysts' long-term average annual earnings growth predicts are a good resource for this information.

When you choose your investment, be sure of the following.

%u2022 Get stocks that yield more than 3 percent. They are good. On the other hand, the greater yield could better, but do not be a yield chaser. Another important thing to be considered is safety measures and longevity.
%u2022 In dividend Real Estate Investing you require to select well and be carried well. One of the most imperative but less valued aspect of dividend real estate investing is the fact that the most excellent dividend payer tend increase their dividends year in and out.
%u2022 You can concentrate more on low-debt companies. Cash-strapped companies could care for dividend payouts as luxury. The higher ratio simply means higher debt.
%u2022 When you have a fix together with some real estate companies, do pay concentration to earning growth. Look if is company's future development is heading up or down. As dividend eventually comes for earnings, you could not expect the dividend to grow if earnings don't.
%u2022 Investment decisions should not be based on maximum dividend yield, high yield in general mean low stock price. Which is could be a good quality reason, but one should also think on company's basic problem that is if a company is facing a problem like loosing money than investing would not be safe!

Narayanan is a skilled real estate professional who can perfectly increase your property value. Contact: vknarayana@gmail.com and for further real estate investing articles, investing articles, real estate investing tips and other related real estates resources please visit http://www.real-estate-investing-articles.net

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Think about owning a diversified portfolio of stocks that pays you to invest, in the form of dividends. Do you own a credit card? Well then you probably understand how fast interest expense can add up, becoming a financial nightmare. The opposite is true with dividend investing and how fast your dividend income can add up. Even better, when dividend paying companies you own increase their dividend payouts, your income increases! There are many questions to ask when investing in dividend paying stocks some of which are:

How long has the company paid dividends ? (Check the dividend yield and history)

There are amazing dividend paying companies such as Colgate Palmolive (NY:CL) (yield 2.0%) that have paid dividends every year since 1895 or Proctor & Gamble (NY:PG) (yield 1.9%) since 1891. These tremendous dividend histories confirm the companies' commitment to paying dividends. Normally dividend histories of 5 to 10 years plus are considered good.

Are the dividends sustainable ? (Check the dividend payout ratio)

There are companies which have good dividend payout ratios like 3M (NY:MMM) which pays out 40% or Johnson & Johnson (NY:JNJ) which currently pays out 38%. The payout ratio is a tool that helps investors determine if the company has sufficient funds for maintaining dividend payouts. Normally a payout ratio below 70% is acceptable.

Are the dividends growing ? (Check the dividend growth rate)

There are companies, such as Sysco (NY:SYY) that have raised its dividends by over 400% during the 10 year period from 1995 to 2005. Sterling Bancorp (NY:STL) raised its dividends over 500% during the same 10 year period! Normally dividend increases that exceed inflation are considered good.

A potential investing strategy is to buy a diversified basket of high quality dividend payers which consistently raise their dividends. Reinvest the dividend income you receive to buy more shares and repeat the cycle to create your own dividend compounding money machine.

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