Markets are off to a laudable start in 2013, and this week stocks in the benchmark S&P 500 Index surged to their highest level in five years. The Dow also is knocking on the five-year high door, closing just shy of this psychologically significant marker. Improving economic metrics—both here at home and in China—have created a cautiously optimistic milieu for investors looking to continue riding the 2012 alpha train.
One compartment on that alpha train that’s been particular good for investors over the past year has been high-yield dividend-paying stocks, ETFs, and so-called alternative high-yield investments such as Master-Limited Partnerships (MLPs), Real Estate Investment Trusts (REITs) and energy and shipping companies.
Many of these investments performed extremely well last year, as money poured into sectors that deliver high dividend yield, as well as the potential for strong share price appreciation. This money flow into high yield securities should come as no surprise, especially given the extremely low yield paid on traditional income-oriented securities such as bonds.
The fact is that the Federal Reserve’s commitment to keeping interest rates at near-zero levels at least until 2014 means that bonds and cash will pay virtually nil, and that means we likely are staring at another banner year for high-yield dividend payers.
So, what areas of the market offer investors the best shot at strong yields and share price appreciation this year?
On the following pages are 7 high-yield dividend stars for 2013.