Looking for Yields in Stocks and Real Estate

The extremely low interest rate environment created by the too big to fail financial institution bailouts has severely harmed savers. Most severely harmed those in retirement that didn’t count on irresponsibly regulators and bankers creating a situation where to avoid a depression they had to punish savers to favor large banks (and others).

For some savings that might normally go into bonds (if the bond market were not so manipulated by the central banks to punish savers) dividend stocks are a good option. The stocks have risks but frankly with extremely strong companies with huge amounts of positive cash flow the future looks brighter than it does for those debt ridden governments.

Apple (AAPL) announced they will start paying a $2.65 quarterly dividend which works out to $10.60 annually. At the current stock price, this is a yield of nearly 1.9%. That is hardly going to make you rich but it is extremely attractive when you can get a much higher yield than savings account, treasury bills… and have the potential gains in stock price. Yes you do also have risk of a declining stock price, but as I have said I think Apple’s stock is an extremely good investment now.

Other good options include: Intel (INTL) which offers a 3.3% yield and Abbott (ABT) which offers a 3.4% yield. I own those 3 and also ONEOK Partners (OKS) which sports a 4.8% yield (but is a bit tricker situation that is suitable for a lower investment I think).

Even a stock like Toyota (TM), which I like as an investment, while it offers only a 1.8% yield that is much higher than you get for savings or treasury bills. So even stocks that are not about yield in the normal market conditions offer an attractive yield today.

I am a bit nervous about health care dividend investments but Pfizer (PFE) is worth considering at 4.1% (as are JNJ and MRK). I really like ABT (they have raised dividends for over 40 straight years, I think), sadly they are splitting into 2 companies. Even so I am planning on staying invested but it is avery big change and would make me worried about having too much committed to ABT.

I would want to have a stable of at least 10 very strong stocks for any significant amount of retirement money I was relying on for dividends. I personally would add to that with a few like OKS (that offer higher yields but that I didn’t want to commit as much to). Some others to consider: PG (3.7%), Aflac-AFL (3.4%) and Kimberly Clark-KMB (3.8%).

Really another great place to look for yield is in rental real estate. Because housing prices are depressed and yields are so low you can buy low. And rental pricing is actually pretty strong (even with the tepid economy). There are risks of course, but the rewards are significant.

Real estate can be managed through REITs (which give you the advantage of diversification and management but the costs that go with management). Renting out your own properties can provide a great return but it requires a much more hands on approach. This is not appealing to some. Which is fair. I think the extremely bad situation the politicians have put savers into may mean that while managing your own rental properties isn’t what you want to do, it become the less of two evils. You can also pay a manager to do property management but those costs are generally very high. If you manage it yourself but hire out as needed for specific tasks you will save quite a bit of money.

And frankly, if you want to look at picking up a stream of income look at doing property management for some individual investors. The marketplace now pays quite a bit for that activity it seems to me.

Of course with all financial moves you make you have to evaluate all the options and make a decision about what makes sense for you. You can rely on anyone else (me, or whoever) to decide what you should do.

Related: Taking a Look at Some Dividend Aristocrats – Sleep well investing portfolio – Looking for Dividend Stocks in the Current Extremely Low Interest Rate Environment