My readers are often asking for safe income ideas. For stocks that pay dividends and never drop in price. It’s a very difficult task, but not quite impossible.
For most long-term investors who want big dividends–I’m talking 6%, 7% and even 8%+ current yields–I recommend a combination of a contrarian and “No Withdrawal” approach. This consists of buying safe dividend-paying bonds and funds when they are out of favor and holding them through any market turbulence.
Big dividends are the rubber duckies of the investing world. Wall Street hysteria may push their prices underwater for weeks at a time, but as the months and years pass these stocks bounce back to the surface. Omega Healthcare Investors’ (OHI) performance during 2008 shows this in action. OHI entered the infamous year paying nearly 7%, making it the ideal stock for a No Withdrawal Portfolio.