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5 High-Yield Stocks with Great Dividend Growth

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Who doesn't want a portfolio that generates higher returns? However, global economic headwinds are leaving investors perplexed about which stocks to bank on. The markets have been on a roller coaster ride in the recent past - either due to the flagging Chinese economy, the Eurozone debt crisis or the U.S. Federal Reserve's pending decision over the first rate hike. Moreover, weakness in the energy sector and a strong dollar are nagging concerns.

Market sentiments have not been upbeat so far in 2015. Major indices have been under tremendous pressure. The Dow Jones Industrial Average dropped 4.4%, The Standard & Poor's 500 lost 3.7%, while the tech-laden Nasdaq Composite Index declined 1.8%, over the past six months. Hence, gauging the market mood and picking the right stock for one's portfolio has become a tricky task.

The global economic turmoil and the recent financial-market volatility had an impact on the health of the U.S. economy that grew 1.5% in the third quarter, marking a sharp deceleration from 3.9% growth registered in the second quarter. Also, the Consumer Confidence Index dropped to 97.6 in October from 102.6 in September, whereas U.S. retail spending for October climbed only 0.1% raising investor concerns ahead of the crucial holiday season.

While the uncertainty related to the Fed rate hike continues and the global markets are still trying hard to make their way out of the woods, investors will obviously prefer to bet their bucks on safer counters.

Where Lies the Safe Haven?

Thus, in the face of such odds, investors should be very careful about their investments. In order to shield themselves from economic upheavals, investors should diligently choose their portfolio of stocks that can give them the best returns. On that note, while building the portfolio, one should consider stocks with a high dividend yield. Investors prefer an income generating stock, and so a dividend paying stock is always a preferable option.

John Davison Rockefeller once said, " Do you know the only thing that gives me pleasure? It's to see my dividends coming in. " People looking for regular income from stocks are most likely to be inclined toward those companies that have a track of consistent and incremental dividend payments. They are safer bets, particularly in a low-rate environment like we are in now, as they provide a cushion during economic uncertainties.

5 Rock-Solid Stocks with Great Dividend Yields

We have picked five stocks that hold promise in a dwindling market. Not only do these stocks have a favorable Zacks Rank #1 (Strong Buy) or #2 (Buy) but also have a dividend yield of greater than 3% and a 5-year historical dividend growth rate of more than 10%.

B&G Foods Inc.BGS , the manufacturer, seller and distributor of shelf-stable food and household products, is a solid bet. The stock flaunts a Zacks Rank #1 and has a long-term earnings growth rate of 13%. Based in Parsippany, NJ, the company has a dividend yield of 3.9% and a 5-Year Historical Dividend Growth Rate of 14.4%.

Investors can also count on Energy Transfer Equity, L.P.ETE , the provider of diversified energy-related services in the U.S., with a Zacks Rank #1 and a long-term earnings growth rate of 17%. This Dallas, TX-based company has a dividend yield of 5.8% and a 5-Year Historical Dividend Growth Rate of 12.2%.

We also suggest investing in Darden Restaurants, Inc.DRI , which carries a Zacks Rank #2 and has a long-term earnings growth rate of 13.3%. This Orlando, FL-based full-service restaurant operator has a dividend yield of 4.1% and a 5-Year Historical Dividend Growth Rate of 12.2%.

Another stock that investors may look forward to is Simon Property Group Inc.SPG holding a Zacks Rank #2 with a long-term earnings growth rate of 8.5%. This New York-based equity real estate investment firm has a dividend yield of 3.4% and a 5-Year Historical Dividend Growth Rate of 15.2%.

Last but not least is DuPont Fabros Technology, Inc.DFT , a real estate investment trust. The company carries a Zacks Rank #2 and has a long-term earnings growth rate of 10.2%. This Washington-based company has a dividend yield of 5.2% and a 5-Year Historical Dividend Growth Rate of 39.2%.

Final Verdict

A dividend is a distribution of part of the company's earnings given to its stockholders either on a quarterly basis or semi-annually or annually. The willingness and ability on the part of the company to pay dividends regularly and increase the same from time to time sends a loud message about its soundness, prospects and performance, and its underlying fundamentals. These together form the base of our investment strategy. Definitely, do not forget to use the Zacks Stock Screener to find other stocks with a winning combination.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SIMON PROPERTY (SPG): Free Stock Analysis Report

DARDEN RESTRNT (DRI): Free Stock Analysis Report

ENERGY TRAN EQT (ETE): Free Stock Analysis Report

B&G FOODS CL-A (BGS): Free Stock Analysis Report

DUPONT FABROS (DFT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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