Since 1980 onward, it has been unusually difficult to find stocks that yield over 7% at the time of investment, are of sufficient quality, and can support the high dividend payout with earnings. Almost three decades of expanding P/E ratios (or, in the case of cyclical companies, just valuations) and a shift towards stock buybacks or dividends has put income investors in the hard spot of finding assets that generate high current income.
Possibly my favorite income stock right now is Royal Dutch Shell (RDS.B). It’s quality comes near that of Chevron and Exxon, but offers a much higher starting dividend yield. It doesn’t have the elevated debt levels at Kinder Morgan or BP that could make a dilutive share offering at low prices a realistic possibility if the price of oil stays low for a while. And it doesn’t have the issue of Conoco where it is almost exclusively … Read the rest of this article!