Get More Yield with Blue-Chip Stocks

Take advantage now while the Great Dividend Shift is offering stocks yielding more than bonds.

One of the best measures of how the market is valuing a stock is the dividend yield -- a stock's annual payout divided by its share price. A dividend yield that's high compared with the interest rate on bonds is often a sign of a real bargain. Right now, the dividend yield of the average stock is, in fact, very high compared with the interest rate on bonds.

At the very least, today's yields indicate that stocks offer better value than bonds. Investors are missing a good deal if they ignore this signal, and the best way to exploit the situation is by purchasing solid companies that pay consistent dividends.

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James K. Glassman
Contributing Columnist, Kiplinger's Personal Finance
James K. Glassman is a visiting fellow at the American Enterprise Institute. His most recent book is Safety Net: The Strategy for De-Risking Your Investments in a Time of Turbulence.