The 11/11/09 issue of the S&P Outlook has the lead article suggesting that retirees will switch from bonds to dividend paying stocks in their portfolios. Basically they are suggesting bonds will be poor investment going forward since bond prices will likely decline while dividend paying stocks will still provide some equity growth.  This seems to suggest future inflation that will cause bond prices to decline.  Of course this will also cause stock PE Ratios to decline but they may still provide some growth.

Some stocks they show as having positive potential are MO, CVX, KO, FPL, GIS, GPC, IBM, JJM, LLTC, MCD, MSFT, ORCL, PFE, VZ, and WMT.  You will note they are all large cap stocks and likely  in the S&P 500 Index.

Sorry I can not attach or provide a URL for the Outlook since it is not publicly available.

Dan

Bob

I just ran a screen from M* on my portfolio.  Dividend 5 yr growth average was 19.95% while eps 3 yr growth average was 10.64%.  I own two utilities one is .97% and 12.5% and second is 18.24% and minus 7.25%, respectively.

I would examine closely firms that grow dividends faster than EPS longer term.  This may be just a temporary catchup or it may be an attempt to show strong dividend growth to boost the stock price.  First check would be to check the trend of the payout ratio.

I am putting more into dividend stocks than bonds.  However, those bonds have done very well during the downturn, so I'm keeping the little devils. (G)

I do expect dividend paying stock to do well.  My bonds also served me well during the 2008 melt down.  However the name of the game is what are you going to do for me in the future as opposed to historically.  While the interest on high quality bonds is fairly secure the question of higher interest rates or inflation on bonds could be a severe drop in price unless held to maturity.  I see considerable risk in long term bonds at this point in time.  The government 30 year bond is yielding 4.397% and while this may sound great in this market it may require waiting 30 years to get back your principle.

It is also good to remember the old saying, "The market will fluctuate" and this is true of bonds as well as equities. (g)

Dan