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Tickers in this Article: BBT, BP, AZN, GE, HUN
For decades, blue chip companies with high dividend yields have been affectionately referred to as "widow-and-orphan stocks" because they represented mature, established companies that paid reliable dividends that both widows and orphans could rely on for a steady income.

Utility companies and industrial conglomerates are often placed in this category, but almost any large-cap company that has paid a sizable dividend consistently over the years can probably be counted on to continue doing so. (To learn more about the benefits of dividends, check out Dividends Still Look Good After All These Years.)

Dividends Don't Rock The Boat
Investing in dividend-paying stocks definitely has its advantages. After all, stocks with high dividend yields generally offer more downside risk protection than growth stocks. This is because the steady cash payout these stocks provide gives investors peace of mind when the going gets rough. So, dividend-paying stocks typically do not fall as fast or as far as high-flying growth stocks (that typically lack a regular dividend payout) when the market goes south. (For more on this, check out How Dividends Work For Investors.)

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Here Today, Gone Tomorrow?
By extension, a portfolio of stocks with high dividend yields may experience less price volatility than a portfolio built entirely of sexy growth stocks.

Still, it is important to note that a regular dividend will only help to keep a stock's price stable as long as the dividend payment continues to get paid out. If a company decides to decrease its regular dividend amount, or cease it altogether, a stock that was once considered a dividend darling can easily take a nasty tumble. So, if you are looking to beef up your portfolio with some dividend darlings, usually the best place to start hunting is with stocks that have paid out increasing dividends consistently over a period of years. Generally speaking, the longer a company has paid out a high dividend yield, the more likely it is to continue doing so in the future.

With that in mind, here are five stocks with sizable current dividend yields that also have a history of strong dividend growth:

Company Current Dividend Yield Payout Ratio Market Cap
AstraZeneca (NYSE:AZN) 8.6% 49% 53B
BB&T (NYSE:BBT) 8% 78% 12.8B
BP (NYSE:BP) 7.9% 49% 133B
General Electric (NYSE:GE) 5% 38% 130B
Huntsman Corp. (NYSE:HUN) 8.2% 16% 1.14B



AstraZaneca (NYSE:AZN) is an american depository receipt (ADR) of the London-based pharmacetical company. With 26 manufacturing locations in 18 countries it has international exposure. In 2008, cash distributions were $2.05 per share, up 9.6% from $1.87 in 2007.

With a climbing dividend and a climbing earnings per share, the payout ratio has been kept in check at a very reasonable 49% on a trailing twelve-month basis. Because this is so low, the chance of a dividend cut is not likely. To back that up even further, according to Thomson Financial Networks EPS estimates for 2009 are sitting at $5.27. (To learn more about the compound nature of dividend returns, check out The Power of Dividend Growth.)

BP stock has been hit hard over the last year and is down about 40%. This has propped up the dividend yield from May 2008's yield of around 4%, when it was trading around $76 and had a quarterly dividend of 81 cents. Since then the dividend has raised to 84 cents per share creating a payout ratio of 50%. However, oil is down, trading around $50 a barrel, with oil futures averaging $43.31 a barrel in the quarter, so earnings are at risk. This could also create a great entry point if the stock takes a dip in the short term. It looks like there is support around the $39 mark over the last month.

Payout Compared to Earnings
BB&T just released first-quarter 2009 reports on April 17. Earnings per share has dropped 38% to 48 cents per share. The dividend was raised 2.2% from one year earlier to 47 cents per share. The company announced on April 27 that the writeoffs from home equity loans were higher than previously reported - rising from 1.09% to 1.9% - but did not impact reported results. The board of directors must have a positive outlook for the company, but a trailing twelve-month payout ratio of 78% brings the ability to pay the current dividend into question. Although on thin ice, the yield over 8% is very attractive.

Dividends for the Long Haul
Despite the cliché, you certainly don't have to be a widow or an orphan to appreciate the staying power dividend-paying stocks can add to your portfolio over the long haul. Keep your eye on these high dividend-yielding stocks as we wait for an economic recovery.

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