One of America’s oldest and most prestigious companies has become an accidental high yielder. General Electric (GE) was founded by Thomas Edison back in 1892. The company has been a fixture on the Dow Jones Industrial Average since 1896. Today, the industrial conglomerate is a $165 billion dollar company with nearly $157 billion dollars in revenue.

GE has over 300,000 employees and is the second largest company in the United States. General Electric has its hand in just about every area of the U.S. economy. It is one of the most diversified companies in the world. General Electric owns GE Capital, GE Energy, GE Technology Infrastructure, GE Home & Business Solutions, and NBC Universal.

Despite its iconic status, the stock has been a terrible investment since CEO Jeff Immelt took over. The company became too big and bloated suffering through its worst performance ever. General Electric shares have declined 55% over the past 5 years. General Electric even cut its dividend last year for the first time since 1938. The dividend cut was prompted by a move to conserve cash and maintain its AAA credit rating. The company lost its AAA credit rating anyway and things were darkest at GE in the spring of 2009.

But things finally appear to be changing at GE. General Electric is seeking to become a much leaner company. The company has been making moves to divest itself of its industrial and consumer businesses over the past two years. The company is turning its focus towards energy and healthcare. GE is still awaiting regulatory approval of its sale of NBC Universal to Comcast Corporation. GE has also been cutting the size of GE Capital by selling off assets and reducing the unit’s leverage. The financial arm of GE almost brought about the company’s collapse during the crash of 2009.

GE has done an excellent job of writing down the bad loans in it portfolio and increasing its cash reserves. The company expects to have a $25 billion dollar war chest on hand by the end of the year. GE recently increased its dividend last month to 48 cents per share and the company is so flush with cash that it is re-instituting its $15 billion dollar share buyback campaign.

GE is often compared with other financial companies due to the size of GE Capital. However, the market appears to be making a big mistake. GE is more than your typical finance company. The company has great growth opportunities domestically and internationally in the energy, healthcare, and industrial sectors. The conglomerate is investing heavily in renewable resources, turbine technology, appliances, and aircraft engines.

The stock now sells for $15 per share and is currently yielding 3.1%. The stock currently trades at 13.5 times this year’s earnings of $1.11. The company’s earnings declined 13.5% over the past 5 years. The good news is that earnings are expected to grow 10.5% over the next 5 years. Dividend Investors are getting a chance to buy an American classic at a bargain price.

You have almost certainly heard of Paychex (NASDAQ: PAYX). Paychex is the second largest payroll processing company in the United States. Paychex offers business process solutions to companies looking to outsource many human resource department functions. The company provides payroll functions, tax payment services, retirement benefits, human resource services, and health insurance. It’s a one stop shop for both small businesses and large companies. Paychex grew from a small company with a few employees into a Fortune 500 company with over 100 locations. Paychex now services over half a million business customers in the United States alone.

Paychex is an earnings juggernaut producing over $2 billion dollars in revenue each of the past three years. Paychex’s growth was affected by the struggling economy over the past few years. The payroll processing industry has been affected by the high unemployment rate and the bankruptcy of many businesses. Some businesses have scaled back on benefits in attempt at cost reduction. All of these factors lead to lower check volumes. The biggest competitor in the industry is ADP. ADP is the largest payroll processor in the industry with revenues over $8.8 billion dollars.

Despite all of these issues, Paychex still managed to have profitable sales growth. Growth came in at 3.2%. Paychex should benefit from an improving economic outlook. The unemployment rate may still be high but it is decreasing. Continued job creation will lead to more clients seeking payroll services. Paychex stands to benefit from any recovery in the job market and its bottom line should increase as well.

Paychex has been able to withstand the poor economy due to its great balance sheet. The company’s balance sheet is one of the best in the industry. Paychex has $366 million dollars and cash and no long term debt obligations. The payroll company generated $610 million dollars in free cash flow this year. Paychex is able to generate interest income in the mid teens off of money held for clients.

Shares currently trade just south of $26. Analysts are looking for earnings of $1.37 this year and $1.48 next year. That would place a price to earnings ratio of 19 on the stock for this year and 17.5 for next year. Both are higher than the industry average. Earnings are expected to rebound with the company growing at an 11% rate over the next 5 years. The earnings growth drivers will be human resource services and investment income. Payroll processing growth is expected to be flat for the near future.

Paychex currently has one of the best yields in the market for a blue chip company. The stock is yielding 4.77%. The dividend payout rate is alarmingly high at 83% of next yea’s earnings. However, the company should be able to sustain it due to the company’s balance sheet and expected earnings growth. Shares may not be cheap based on its P/E and book value but income seeking investors may find the shares worth buying for the juicy dividend.

What do you think about Paychex?

Standard and Poor’s (S&P) analyzes their top-performing blue-chip stocks each year to provide a list of S&P 500 Dividend Aristocrat stocks. To qualify for this list (See safe dividend list), the company must be part of the S&P 500 and have dividends that have consistently increased for at least the last twenty-five years. As of June 30, 2010, the S&P 500’s Dividend Aristocrat Index has a one year return of 23.02%.

Building Passive Income

If you’re building a stock portfolio that will provide you with passive income, you can generally depend on these high-performing dividend stocks to continue paying monthly or quarterly payments. Not only can you depend on the checks to keep coming, you can also expect them to increase each year. This feature makes the Dividend Aristocrat stocks a good way to protect your investment from inflation. In addition to the dividend payments, the price of these stocks remains stable compared to other options. Over time, the dividends will pay for your initial investment, and you will still have the original stock available for sale if the need arises.

Build Your Portfolio by Reinvesting the Dividends

If the stock you are adding to your investment portfolio offers a reinvestment plan, and you don’t need the passive income for living expenses, it would be a smart idea to take advantage of the offer. As your dividend payments are reinvested in the original stock, your number of shares will increase each quarter. Because this doesn’t require an out-of-pocket investment, it’s a painless way to build your asset base. If you decide that your dividends have grown to the point that they could pay for your living expenses, and you would like to stop working, you can opt out of the plan and live the good life courtesy of your high-paying Dividend Aristocrats.

Feel Secure with Stocks that are Household Names

You may have never heard the term Dividend Aristocrats, but you will certainly have heard of the companies that make up this S&P index. In 2010, almost fifty well-known companies are included in the S&P 500 Dividend Aristocrat Index.

We created the safe dividend list for our top dividend members. In that list we show all of the dividend aristocrats and we include our top dividend data and ratings.

Like any other dividend paying investment, investors will often choose to add Canadian dividend stocks to their portfolio to take advantage of regular cash payments from the underlying asset in addition to any appreciation they might see when they decide to sell their shares. Many Canadian stocks are offered by extremely stable companies including the large Canadian banks. These enterprises offer stable returns on your investment that have historically kept a few points ahead of the current inflation rate.

High Yields Are Attractive

You may also find international stocks pay a rate much higher than the more stable companies. If a stock’s current dividend rate is over 10%, it may still be a good item to add to your portfolio. However, you must recognize that it will carry more risk, and your investments should be diversified accordingly to minimize any potential losses. For a few examples of high paying Canadian dividend stocks, the Yellow Pages Income Fund was showing an 18.11% dividend yield, and the Penn West Energy Trust was reported to have a 15.37% dividend yield.

Canadian Dividend Stocks Could Pay For Themselves

If you’re interested in investing your money in one of these stocks, you should consider one of the Canadian dividend stocks that have been dubbed a dividend aristocrat by Standard and Poor’s. While many investors may be familiar with the American companies that are on this list, they may not have noticed that it includes a few Canadian stocks as well. To be added to the aristocrat stock list, a company must have weathered bad times, as well as flourished in good times, without cutting dividend payments to their shareholders. If you hold these stocks for a few years, you can see that your initial investment could be repaid well before you decide to sell your shares. The following list shows a few of these smart investment choices:

• Bank of Nova Scotia (BNS) – dividend yield of 4.2% with a one-year return of 32.4%
• Toronto-Dominion (TD) – dividend yield of 3.5% with a one-year return of 38.3%
• Enbridge (ENB) – dividend yield of 3.7% with a one-year return of 31.1%

Canadian Dividend Stocks Are Traded On The New York Stock Exchange

If you currently invest in US stocks, it’s just as convenient to purchase Canadian dividend stocks. It makes sense that these investment options would be traded on the Canadian Stock Exchange in Toronto (TMX), but many are also available on the New York Stock Exchange. You should be able to purchase selected Canadian dividend stocks in the same manner that you invest in any major US stock.

The following Canadian dividend stocks are traded on the New York Stock Exchange and have shown stable rates of return in recent years:

• Bank of Montreal (BMO) with a yield of 4.32%
• BCE Inc (BCE) with a yield of 5.63%
• Canadian Imperial Bank of Commerce (CM) with a yield of 4.57%
• Sun Life Financial Inc (SLF) with a yield of 4.59%
• TELUS Corporation (TC) with a yield of 5.20%
• TransCanada Corporation (TRP) with a yield of 4.29%

Regular Dividend Payments Can Grow Your Portfolio

Many people are attracted to Canadian dividend stocks because of their high dividend yield when compared to other investment options. These stocks continue to offer a monthly or quarterly payback on your initial investment that helps increase your return while offsetting your losses due to inflation. If you also enroll in any available DRIP plans, the benefit will quickly compound as your number of shares grows with every dividend payment.

Tax Implications

Don’t forget that while dividends are given preferential tax treatment in most cases, they are still considered taxable income. The Canadian government will impose a 15% non-resident withholding tax on these dividend payments, but you can recoup a portion of this cost by filing for a foreign tax credit on your yearly tax return. Depending on your individual situation, the US income tax on these dividends may vary, but it will generally amount to a tax of 15% or less.

The much anticipated and highly debated Wall Street reform bill has finally made its way into the final stretch, as Wall Street saw an exceptional week of trading. The reform has increased confidence abroad from foreign investors and governments, who have criticized the United States for lack of action on financial reform, and has eased many concerns regarding the accountability of the specific entities that had contributed to the recent financial crisis. The Wall Street reform places more focus on stability than on profit, and on protecting the consumer more than the financial institution.

Banks are required to have higher reserve funds to be able to account for any crisis, and credit rating agencies will be held more accountable for risky lending. A new consumer regulator will be added to the Federal Reserve, and this regulator will have the ability to oversee the Fed, which has been under fire for all of the ill-informed and audacious lending that has contributed to the financial melt down on Wall Street. The Federal Reserve scored a win, being able to retain its power to supervise all banks, when original plans were to strip the Fed of all its powers and make it a last resort for lending. Instead, the addition of the Consumer Financial Protection Bureau will keep the Federal Reserve regulated and in check.

This reform offers much more long term stability at the sacrifice of windfall profits for the financial giants. Financial giants such as Goldman Sachs would be prohibited from proprietary investing and would be limited in their investments in hedge funds and private equity funds. Banks would be under greater regulation regarding credit cards and mortgages, but would retain their ability to invest in foreign exchange rate and interest swaps, which are known to contribute most to their growth.

The market has had a great week that was much better than anticipated due to the fact that the bill was becoming finalized and foreign confidence was on the rise as Europeans and Canadians regained confidence in the ability of the United States to regulate Wall Street, which was the epicenter of the financial crisis that sent ripples into foreign economies as well as our own. Consumers are able to place more confidence in the financial sector as well, knowing that the reform will offer them much more protection than they had ever been afforded in the past. The Wall Street reform bill is expected to pass and be signed into law by President Barack Obama before the July 4th recess. This will be known as another key domestic policy win for the President, with congressional elections fast approaching.