Dividend Stocks

To Stock, Bond, or Sock(underneath the mattress) that is the question.

This week I would like to focus on stocks. Scary for most, yet important enough to not ignore. Three weeks ago we had an unprecedented event in our lifetime. We had, what the media was coining, bloody Monday. Over 100,000 people were laid off in one day. Unless you were old enough to be employed in the early 1930s, I don't think you or anyone you know have experienced such economic instability or a lack of investor confidence in your lifetime.

Such uncertainty in future outcomes has 76% of us scrambling for ways to either preserve our money or invest it. Yet virtually no one is talking stocks these days.I even read a high profile magazine that recommends we wait before jumping back into the stock market. But is this the best advice? What if we are within 5 years of retiring and have lost a significant amount of our retirement funds in the last year or two? Perhaps we need to be a little more aggressive to try and make up for some lost time.

I have a great recommendation concerning stocks, if you don't mind. Before I reveal this strategy, I just want to say if I have learned anything from watching Jim Cramer over the last few months it is to not invest in any bank stocks at all!! ( Kind of frightening since a major cause of the Great Depression was the ultimate failings of all the banks.) As for the sector that I think is recession proof, for now, is Energy stocks. Not just any energy stocks but what we are looking for are some good high-dividend yielding investment ideas. Stocks are nothing to shy away from especially since most are so beaten down that they are offering incredible value as far as pickings go. Three years ago, every ad on wall street was ATTN: Hedge fund managers wanted!. Now it is a little different, I saw a sign on Wall Street saying HELP: Investors wanted!

Several of my sources are pointing to high dividend yielding stocks in the energy sector.

Harry S Dent Jr.,author of "The Great Depression ahead", is forecasting an energy and commodity bubble that will peak sometime in the beginning of 2010.(more on that topic next week) He recommends we sell all stock, except energy and commodity stocks. Another entity encouraging the examination of energy stocks is the March 2009 edition of Smart Money. They have a section devoted to Dividend Stocks primed for payouts. Most of their recommendations range from 5% to 8.5%. Some are Tobacco stocks, Tech stocks, and drug makers. But The golden child in this article, I think, is BP. Bp is, you guessed it, an energy stock.

Which brings us to this week's assignment. First, are energy stocks the hidden bull market within a bear market? Or just a fad destined to the same fate as pretty much any other stock these days? Second, which dividend stocks look the most lucrative for 2009? Third, I would like to get more in depth on BP. The Wall ST. Journal describes it as a stock that is currently yielding 7.2% and has managed to raise its dividend in all but one year since 1993. It also has strong cash flow and a CEO determined to cut costs. BP is currently trading for around 43 bucks a share. Bargain or pass it by? You decide. See ya next week

Here is a link to Cramer discussing dividend stocks including BP:Cramer.