Power Play: Making money in dividend stocks

Airport travelers moving through busy airport.
David Papazian | Getty Images
Airport travelers moving through busy airport.

The Dow climbed above 18,000 during trading, something that has not happened since April 28.

Burns McKinney, portfolio manager at NFJ Investment Group, tells CNBC's "Power Lunch" on Tuesday the U.S. equity markets are priced at a slight premium to their historical averages.

"When adjusting for still-high corporate profit margins, multiples are even higher. That suggests that we don't expect much in terms of gains from multiple expansion, but for markets to return in line with earnings growth of 3-5 percent; add on 2 percent dividend yield and you wind up with 5-7 percent," McKinney said.

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Even though the returns on equities are not great, McKinney believes they are still better than what you can get from fixed income.

Right now, McKinney likes dividend-paying stocks such as Travelers. "Dividend payers offer a safe haven from market volatility and should benefit from mean reversion," McKinney said.

Travelers is higher during trading and is up 15 percent over the past year.