The company was once considered among the best run companies in the world. It was not just a manufacturing powerhouse, but it also had a massive television network and finance arm. Then the financial led recession hit and that finance arm turned into a massive liability.
GE’s dividend, after years of regular increases, was cut and the stock price fell precipitously. Not a good outcome for stockholders trying to live off of dividend income. This, however, is the exception, not the norm. And today there are a large number of great companies on “sale.”
Some Options
Microsoft Corporation (NASDAQ:MSFT) is a technology powerhouse. It has three key businesses, Software (the Office suite), operating systems, and Xbox. With the help of Nokia (NOK), it is working to establish itself as a big player in cell phone operating systems to early praise. It has a huge pile of cash on its balance sheet and has been upping its dividend in recent years. A recent yield of over 3% makes this a competitive option to a bond.
Johnson & Johnson (NYSE:JNJ) is a healthcare powerhouse. It has operations in the pharmaceutical, medical device, and consumer products space. One of the interesting things about JNJ is its history of using acquisitions to change its business over time. So while there may be times when the company looks out of step with the market, management has an impressive history of getting back on track. With an notable history of annual dividend increases and a dividend yield of over 3%, this, too, is a great alternative to a bond.
Genuine Parts Company (NYSE:GPC) is far less well known than the other two industry giants above. However, the company has a huge position in the automotive after part market along with solid businesses in electronic parts, machine parts, and office supplies. Although its 3% yield may make it a little pricey at present, it has increased its dividend disbursement every year for decades. It is a conservatively managed company that has historically kept returning value to shareholders a top priority.
E I Du Pont De Nemours And Co (NYSE:DD) is a chemicals giant that has a keen focus on innovation. Management has taken some risks of late, pushing its expansion into the agricultural market with acquisitions, for example. Its shares have come under pressure because of the transition it is looking to make and the cyclical nature of the chemicals business. However, it is a well-run company, is financially sound, and has a solid history of success. Investors should strongly consider it and its nearly 4% dividend yield.
Think Beyond the Bond
PIMCO’s Gross is warning investors that bonds may not be the safe haven they believe them to be. Take heed of his warning. The four stocks above are all fairly diversified, financially solid, and can offer yields that are competitive to those offered by bonds today. While there are risks in owning any stock, the benefits likely outweigh the negatives in this historically low interest rate environment.
Yours,
The article PIMCO’s Gross Makes Prescient Warning originally appeared on Fool.com and is written by Reuben Gregg Brewer.
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