This year is starting to feel like 2008 all over again. Volatility has returned as Europe's debt woes are starting to have real effects on the market. Investors fled risk, looking for safety in the dollar and U.S. Treasuries; however, yields on fixed income investments such as bonds, CDs and cash are excruciatingly low, while the Fed continues to keep rates down in order to stimulate the economy. This flight to quality and the resulting plunge in the equities markets has created opportunities for investors with long-term focus.

IN PICTURES: Digging Out Of Debt In 8 Steps

Dividends, Dividends, Dividends
Whether you love him or hate him, Jim Cramer certainly knows his way around the stock market and recently he has been giving some of the best investment advice for long-term portfolios: find solace in dividends. While the news may come a shock to his fast-trading lighting round viewers, since the 1960s dividends have accounted for more than 65% of the total return of the iShares S&P 500 (NYSE:IVV) in sideways markets similar to the one we are currently in. Dividends help cushion downward movements in stocks and help boost upside in the markets rallies.

Cramer has been recommending "Accidental High-Yielders". These are good quality companies whose dividend yields would not be that impressive if it weren't for the fact that their share prices have been pushed down with the rest of the market. Their newly-minted high yields can help buoy their stock prices while providing increased returns for investors.

Adding the High-Yielders
There are plenty of dividend-focused exchange-traded funds (ETFs), such as the SPDR S&P Dividend (NYSE:SDY), and these could represent a good catch-all investment in the dividend space. However, looking under the hood of one of these ETFs investors can find better examples of accidental yielders. Here are a few picks that Cramer could be proud of.

Combining one part boring utility and one part exciting cleantech growth stock, trash hauler and green-energy superstar Waste Management (NYSE:WM) fits the bill as a great dividend play. With the market taking the wind out of its sails, shares of the company now yield nearly 4%. The company recently reported a gain of 17% in its first quarter of 2010, referencing volume and commodity price improvement. Revenue grew 4% to $2.94 billion.

Less than 40% of chemical giant DuPont's (NYSE:DD) revenue comes from the United States. Investors flocking towards the greenback for safety has sent shares of the company downwards, boosting DuPont's yield to nearly 4.6%. A victim of the global credit crisis in 2008, business has rallied in the past two quarters, with profit growing 130% to $1.24 per share, topping analyst estimates.

The European debt crisis and proposed Australian super tax are adding to the fears of a global slowdown and in turn are taking down commodities prices. Shares of hard asset producers have fallen and several are now trading at decent yields. Mini-mill steel producer, Nucor (NYSE:NUE) is trading at a 3.4% dividend yield and represents one of the lowest cost-to-production producers. Nucor currently trades at a cheap 11 forward P/E.

Bottom Line
With market volatility returning to the everyday forefront, investors have an opportunity to pick up some high-quality companies with newly-supersized dividend yields. These dividends can help cushion the market's wild swings over the next few months. The previously mentioned stocks as well as dividend ETFs like the WisdomTree Large Cap Dividend (NYSE:DLN) will make perfect additions in this market. (Looking to add dividend paying stocks to your portfolio? Read Long-Term Utility Dividends.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  2. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  3. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  4. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  5. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  6. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  7. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  8. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  9. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  10. Forex Fundamentals

    How to Buy Chinese Yuan

    Discover the different options that are available to investors who want to obtain exposure to the Chinese yuan, including ETFs and ETNs.
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center