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Buy The Big Dividend Stocks?

Wednesday, 10 Dec 2008 | 6:30 PM ET

With the market trading sideways more investors are turning to high yielding dividend stocks. But can you trust these companies to keep pumping out profits?

More Dividend Cuts Coming?
Assessing whether high dividend yields are a mirage, with the Fast Money crew.

If you follow financial news closely, you probably know that in recent days companies such as Fortress Investment Group have said they will suspend their quarterly dividend.

Other firms, that don’t want to eliminate the dividend all together, have lowered it substantially. Wachovia would fall into that category.

And yet others, including GE, the parent of CNBC, have promised investors that they intend to keep paying dividends.

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High Dividend Yields in S&P 500

COMPANY YIELD
Altria (MO) 8.6%
Harley Davidson (HOG) 7.9%
Pfizer (PFE) 7.8%
Bank of America (BAC) 7.6%
Morgan Stanley (MS) 7.2%

Source: Standard & Poors

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With so much uncertainty and confusion surrounding dividends, what's the best dividend stock play?

Karen Finerman

I always look at companies with business models that have predictable cash flows, explains the Chairwoman. I like the tobacco names such as Reynolds, Altria and Philip Morris as well as companies in the liquor business such as Diageo.

And be careful of Harley Davidson she adds. It has a lot of consumer exposure.

Jeff Macke

I like Phillip Morris , too, adds the Wolf.

Guy Adami

I’d go to the utilities, says the Negotiator. PG&E has been crushed and it seems to have been bottomed out.

If you’re looking at Pfizer right now it’s probably dead money.

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Trader disclosure: On Dec. 10th, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (SDS), (MSFT), (WMT), (MCD); Adami Owns (AGU), (BTU), (C), (GS), (INTC), (MSFT), (NUE); Seymour Owns (AAPL), (BAC), (F), (MER); Seygem Asset Management Owns (EEM), (FXI), (RIO); Finerman's Firm Owns (DSX), (DEO), (MSFT), (MO), (PM), (RAI), (DVN), (DYN; Finerman's Firm Is Short (IYR), (IJR), (MDY), (SPY), (IWM), (COF), (GNK), (SPG), (USO); GE Is The Parent Company Of CNBC

Terranova Is Co-Portfolio Manager Of The Virtus Diversifier PHOLIO: Virtus Diversifier PHOLIO Owns (IGE), (DBC), (DBV)

Terranova Is Chief Alternatives Strategist Of Virtus Investment Partners, Ltd.; Virtus Investment Partners Owns More Than 1% Of (ABD), (ARE), (BIG), (OFC), (DLR), (EXR), (IGE), (MAC), (DBC), (DBV), (SKT), (UA); Virtus Investment Partners Owns More Than 1% Of (CLB); Virtus Investment Partners Owns More Than 1% Of Seagate Tax Refund Rights

  Price   Change %Change
DGE
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FIG
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GE
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HOG
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MO
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PCG
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PFE
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PM
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RAI
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MS
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