Some current income bargains.

In the last month or so there has been a sell off in dividend paying stocks.  Frankly many of those securities were formally priced significantly above value.   The fear that interest rates are headed up is confirmed in the huge run up in mortgage rates in just the last two weeks.  Mortgage rates are up almost one full percentage point from around 3.5% to 4.5% now.  Note that in the last week they have moderated some back towards 4.25% and we believe they will moderate a bit more before stabilizing around 4%.  The real key here is the 10 year US Treasury that has now moved up strongly to around 2.5%.  That rate was about 1.5% just some over one month ago.  That rate is likely to stabilize here around 2.5% for the near term.  Unlike the mortgage rate that will be affected by lower mortgage activity at a higher rate, treasuries still have significant buying from the Federal Reserve.   All said good dividend stocks look like a good buy here due to the fear of higher rates. Below are some of our favorites. 

Realty Income, symbol O, has always been one of our favorite picks.  Superb management,  shareholder friendly, and a monthly ever increasing dividend.  Current yield of just over 5% is solid long term.   Realty Income is a triple net leaser and like many REITS have lowered their long term cost of capital with significant reissuing of debt.  Buying O here in the $42 range is a nice income producer for most portfolios. 

Southern Company, symbol SO,  is the preeminent electric producer in the country.  Great management and a rock solid dividend.  Add in that they operate in a area that is the best place in the US for a regulated utility.  Like Realty Income this company has done a good bit of reissuing of debt at much lower rates long term.  Here at around $43 per share it yields just under 5%.  This stock is what used to be known as a widows and orphans stock and owning it makes me sleep well at night. 

AT&T, symbol T,  this stock has drifted back down to around $34 now and yields over 5%.  You might not get a lot of capital gains, but with their business model and rock solid finances this one is a good buy at this price for future income. 

All three of these are not big winners if you are looking to make a big gain. However each one beats CD's, US Treasuries, and most bonds at current prices.  Little downside risk, dependable income, and sleep well at night safety make for good investments in current market conditions.