Bargain Dividend Stocks Keep Paying Off

NEW YORK (TheStreet) -- Hersh Cohen, the manager of Legg Mason ClearBridge Equity Income (SOPAX) who has been investing in dividend stocks for four decades, is finding some of the biggest bargains of his career. They include such companies as H.J. Heinz HNZ, Johnson & Johnson JNJ and Procter & Gamble PG. The stocks appear cheap because of their fat dividend yields, Cohen says. When share prices drop, dividend yields climb. And after languishing, many of Cohen's favorite stocks yield more than 3%. That's a relatively rich payout when 10-year Treasuries yield 3% and money markets offer negligible returns. "This is the first time since the 1950s when you can get higher yields on great companies than you can get on fixed-income investments," Cohen said. Cohen spoke at the Morningstar Investment Conference in Chicago. Other speakers who joined him in pounding the table for dividend stocks were Donald Kilbride, manager of Vanguard Dividend Growth (VDIGX), and Joe Matt, an analyst for American Funds. Cohen argued that stock dividends can provide a reliable income stream. While some banks have cut their dividends recently, many companies have maintained long records for raising their payouts annually. During the past decade, S&P 500 dividends increased 5.9% annually. Companies that made dividend increases during the credit crisis included International Business Machines IBM, PPG PPG and Wal-Mart Stores WMT. To read the rest, head over to TheStreet.com