3 Stocks for Investors Fleeing Bonds

Corporate bonds seem priced like Las Vegas houses, circa 2006. Current yields are puny – about 3% on 10-year issues of decent credit quality. Investors who collect them accept the risk of losing money if they sell before maturity, particularly if the economy falters or interest rates rise. Yet, investors continue stuffing cash into corporate bonds because short-term deposits pay nearly nothing and wild stock market swings make shares look unstable.

There's a case to be made for stocks at the moment (prices are too low relative to earnings) and against them (earnings are too high relative to the economy's size). Whichever seems more convincing, stocks look like a better deal than bonds. The earnings yield for the S&P 500 index (that is, earnings as a percentage of the stock market value of America's big companies) stands at more than 6%. The gap between that number and the 10-year Treasury yield is the widest in three decades, The Wall Street Journal recently reported.

The three companies below have earnings yields over 8% and dividend yields that are greater than the benchmark 10-year corporate rate of 3%. Also, these companies boosted their dividends within the past year. Bond investors are typically stuck with fixed payment rates. (more)