This adviser likes dividend stocks

Last month, health care giant Johnson & Johnson [Ticker: JNJ] offered investors $550 million in 10-year notes yielding 2.95 percent. Should squeamish investors have joined the mass exodus from the stock market to the bond market and bought the Johnson & Johnson debt? Or should they have invested in the company's stock? Based on the stock price at the time of debt offering -- about $58 -- and Johnson & Johnson's quarterly dividend of 54 cents, the stock would have given investors a yield of about 3.7 percent, 25 percent more than the yield on the bond.

In more normal times, most investors would pick the stock, counting on not only the higher yield but an additional return based on the likely prospect that the stock price would rise over the next decade. But these are anything but normal times. Investors took $16 billion out of stock funds in June and July while putting $50 billion into fixed-income funds over the same period, according to the Investment Company Institute, a mutual fund industry trade group. "It just shows you how risk-averse investors have become over the last two years," Mr. Frankola said.

Source: Pittsburgh Post-Gazette

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