Many investors need income, especially as they reach retirement. They look for ancillary cash flow to supplement their Social Security payments and any retirement benefits from a company for which they've worked. But those aren't the only investors who should be interested in income.
That's because studies show that dividends are a significant contributor to overall performance of a stock. When held for years, a stock's dividend can help diminish the volatility of a stock's price and keep returns reasonable, especially in down markets. Here are five stocks that have decent income as well as potential capital gains. All are exceptionally financially strong.
Verizon Communications (NYSE: VZ). Yield: 6.5%
Provides communication services in the United States and internationally. It operates in two segments, Wireline and Domestic Wireless. The Wireline segment provides voice, internet access, broadband video and data, next generation internet protocol (IP) network services, network access, and long distance services to consumers, carriers, businesses, and government customers. Operates a fiber-to-the-premises (FTTP) network under the FiOS service mark that offers bandwidth, and designed to handle future broadband and video-applications.
As of December 31, 2008, this segment's wireline network included approximately 36,161,000 wireline access lines, 8,673,000 broadband connections, and 1,918,000 FiOS TV customers. The Domestic Wireless segment offers wireless voice and data products, and other value-added services, as well as sells equipment. This segment serves approximately 80 million customers.
Microchip Technology (NASDAQ: MCHP). Yield: 5.2%
Together with its subsidiaries, develops and manufactures semiconductor products for various embedded control applications. Product portfolio comprises 8-bit, 16-bit, and 32-bit PIC microcontrollers; and16-bit dsPIC digital signal controllers, which feature on-board flash memory technology. The company also offers development tools; analog and interface products, including power management, linear, mixed-signal, thermal management, and interface products; and memory products, which primarily consist of serial electrically erasable programmable read-only memory products. It serves consumer, automotive, industrial, office automation, and telecommunication markets. The company markets its products primarily through a network of direct sales personnel and distributors in the Americas, Europe, and Asia.
Paychex (NASDAQ: PAYX). Yield: 4.3%
Together with its subsidiaries, provides payroll, human resource, and benefits outsourcing solutions for small- to medium-sized businesses in the United States and Germany. It offers payroll processing services, which include calculation, preparation, and delivery of employee payroll checks; production of internal accounting records and management reports; preparation of federal, state, and local payroll tax returns; and collection and remittance of clients' payroll obligations. The company also provides payroll tax administration services; employee payment services; and regulatory compliance services, such as new-hire reporting and garnishment processing. Its human resource outsourcing services include payroll, employer compliance, human resource and employee benefits administration, risk management outsourcing, and the on-site availability of trained human resource representatives. The company offers retirement services administration, workers' compensation insurance services, health and benefits services, time and attendance solutions, and other human resource services and products. It also operates a professional employer organization. As of May 31, 2009, the company served approximately 554,000 clients in the United States, and 1,600 clients in Germany.
Sanofi-Aventis (NYSE: SNY). Yield: 3.8%
A pharmaceutical company, contributes to enhancing life by providing an offering of medicines, vaccines, and integrated health care solutions adapted to local needs and means primarily in Europe and the United States. The company has products in the areas of thrombosis, cardiovascular, metabolic diseases, oncology, central nervous system, internal medicine, and vaccines. The company's vaccines principally include pediatric combination and poliomyelitis vaccines, influenza vaccines, meningitis/pneumonia vaccines, adult and adolescent booster vaccines, and travel and endemic vaccines. It has collaboration agreements principally with Novozymes, Dyax Corp. (NASDAQ: DYAX), Oxford BioMedica, Regeneron (NASDAQ: REGN), IDM, Zealand Pharma, UCB, and Crucell N.V., as well as partners, including Immunogen (NASDAQ: IMGN) Coley, Wayne State University, Innogenetics, and Inserm. The company also has an agreement with Drugs For Neglected Diseases Initiative (dndi) for the development, manufacturing, and distribution of fexinidazole, a drug for the treatment of human African trypanosomiasis. In addition, the company has interest in Merial Limited, an animal health company that provides a range of products to enhance the health, well-being, and performance of animals.
Clorox Co. (NYSE: CLX). Yield: 3.4%
Engages in the production, marketing, and sales of consumer products in the United States and internationally. The company operates through four segments: Cleaning, Lifestyle, Household, and International. The Cleaning segment consists of laundry, home-care, professional products,and auto-care products. This segment offers its products under the Clorox, Clorox 2, Formula 409, Liquid-Plumr, Pine-Sol, S.O.S, Tilex, Green Works, Armor All, and STP brands. The Lifestyle segment offers food products, water-filtration systems, filters, and natural personal care products under the Hidden Valley, K C Masterpiece, Brita, and Burt's Bees brand names. The Household segment provides charcoal, cat litter and plastic bags,wraps, and container products under the Glad, Fresh Step, Scoop Away, Ever Clean, Kingsford, and MatchLight brand names.
The International segment offers home-care, laundry, auto-care, water filtration, charcoal and cat litter products, dressings, plastic bags, wraps and containers, and insecticides under the Clorox, Javex, Glad, PinoLuz, Ayudin, Limpido, Clorinda, Poett, Mistolin, Lestoil, Bon Bril, Nevex, Brita, Armor All, STP, Green Works,Sabra, Pine-Sol and Agua Jane, Ever Clean, Chux, Kingsford, and Hidden Valley brand names. The company markets its products primarily through mass merchandisers, warehouse clubs, grocery stores, direct sales force, distributors, Internet, retail outlets, and a network of brokers.
Ted Allrich is the founder of The Online Investor, founder of Allrich Investment Management, LLC, as well as the author of the book Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he offers advice to investors who are just getting started.











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