As David Rosenberg put it today, "One has to question which asset class has it right – stocks or bonds. It is extremely difficult to square a sustained economic recovery which is what the equity bulls are telling us with a $38 billion 2-year note auction that was sold at a new record low-yield of 0.665% (as was the case on Tuesday)."

Economic recovery should cause interest rates to rise, bonds to fall and stocks to rise. Late

Of the many high yield stocks available today, here are those that have paid dividends since at least 2003, yield at least 2.5% as of July 26, and are rated 4 or 5 (of 5) each for twelve month expected market performance and current price fair value. This list of 20 stocks is from the total universe of 1040 stocks that S&P rates for both expected market performance and fair value.

There are many other stocks available in the US (including ADRs) that are not rated by S&P, but that may fit the general profile of a consistent dividend history, threshold or greater yield, fair value and expected market performance. This list is a good place to start looking, however.

Not all of these companies have pretty charts, or even blemish-free stories, but they are worth evaluation by investors seeking equity income.

Securities Cited: LO, HCBK, PFE, MRK COP, CVX, ABT, CAG, NVS, WSH, K, GE, INTC, PEP, XOM, TRV, CB, WOR, BAX, RE.

Holdings Disclosure: As of July 27, 2010, we own PEP in some, but not all managed accounts, we do not own any other securities mentioned in this article in any managed accounts.

By Richard Shaw
http://www.qvmgroup.com

Richard Shaw leads the QVM team as President of QVM Group. Richard has extensive investment industry experience including serving on the board of directors of two large investment management companies, including Aberdeen Asset Management (listed London Stock Exchange) and as a charter investor and director of Lending Tree ( download short professional profile ). He provides portfolio design and management services to individual and corporate clients. He also edits the QVM investment blog. His writings are generally republished by SeekingAlpha and Reuters and are linked to sites such as Kiplinger and Yahoo Finance and other sites. He is a 1970 graduate of Dartmouth College.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

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