Blue Chip Stocks with 10% Yields

As a dividend investor I'm always looking for quality stocks with high yields. Those can be very difficult to find as everyone wants them. I've noticed most blue chip stocks have a 1-3% yield, which really isn't that good - I can get that from the bank.

There is a way to get high yields - buying and holding the stock over time. Take for example Johnson & Johnson (JNJ). Currently the stock has a yield of 3.1% (which is actually high for it). If you had purchased the stock in December 1995, in 1996 you would have recieved 36.75¢ in dividends for an unattractive yield of 2.2% (share price of $17.02 in Dec 1995, adjusted for splits). But if you held that share over the years, in 2008 you would have recieved a dividend of $1.795 - which now gives you a yield of 10.5%.

Even better - in 1976 (the first year listed on Yahoo Finance) the price was 58¢ and it paid a dividend of .0071¢ for a 1.2% yield (prices adjusted for splits). 32 years later that ends up getting you a yield of 309%! That's pretty impressive.

The key is to find quality companies that pay dividends and regularly increase them - that's how a pathetic 2.2% yield can turn into a wonderful 10.5% yield in a decade.

I am going long on JNJ and their consistent dividend increases is the major reason. GE is another one that I am going long on. Short term it might have some trouble, but 10 years down the road I think I'll be very happy with it.