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While the Market Runs Away, Dividends Will Stay

April 23, 2009

By Bryan Perry, Editor, Cash Machine

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Bryan Perry

Bryan Perry

Bryan Perry has more than two decades of experience inside Wall Street and is editor of Cash Machine, a newsletter advisory service focused on strategic high-income investing.

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In the upcoming months, we're going to see high-yielding income strategies take on more significance. I mean, we can't live on zero funds! We need to have a steady flow of cash.

So if investors' investments aren't providing it and they're sick of measly 1% and 2% yields from their banks or Treasury investments, they're going to start looking into high-dividend-paying stocks.

And now is the best time to be diving into these stocks.

Over the past two months, we've watched the S&P 500 rally 12%. The tone of the markets has definitely improved. But, as I said above, no one can predict when the full recovery will occur. That's why even if you're forecasting a recovery in mid to late 2010, now is the time to be aggressive and buy strategic high-income assets.

As most investors know, the market looks out six to nine months in pricing assets. That means, we can expect equity and corporate bond markets to remain range-bound in the second quarter. But after that, we'll likely see the major averages break out to the upside.

The Time to Start Preparing is Now

And that's exactly what I've been doing in my Cash Machine service. In current environment, it's important to take a broad view of the income markets, focusing on not just aggressive investments offering tantalizing 20%+ yields, but also more conservative income picks with yields that lie somewhere between what the banks pays and the double-digit yields that can evoke a higher level of volatility.

I understand that many investors are being cautious right now, and I also admire that other income investors are seeking opportunities in a down market. So I have taken a step back to refocus Cash Machine to fit both of these needs.

This new focus of streamlining our income strategies in a two-tiered approach gives us the opportunity to balance our risk and take advantage of the historically low valuations for blue chip stocks with hefty dividends and low payout ratios — as well as make room for other high-quality, high-yielding debt securities.

No matter what the market throws our way, our Cash Machine investments are still paying out juicy dividends upwards towards 25%. And even as the market remains volatile, dividend checks will arrive in smart investors' mailboxes. Learn more about how you can jumpstart your very own high-yield portfolio.