Below are several stocks using real cash to raise their dividends:

Raytheon Company’s (RTN) is a technology and innovation leader specializing in defense, homeland security and other government markets throughout the world. March 24th the company increased its quarterly dividend 15% $0.43/share. The dividend is payable on April 28, 2011 to shareholders of record as of the close of business on April 6, 2011. The yield based on the new payout is 3.4%.

Steelcase Inc. (SCS) engages in the manufacture and sale of furniture systems and seating products. March 24th the company increased its quarterly dividend 50% to $0.06/share. The dividend is payable on or before April 13, 2011 to shareholders of record as of April 1, 2011. The yield based on the new payout is 2.3%.

Fifth Third Bancorp (FITB) is a diversified financial services company headquartered in Cincinnati, Ohio. March 22nd the company increased its quarterly dividend 500% to $0.06/share. The dividend is payable on Thursday, April 21, 2011 to shareholders of record as of Friday, April 1, 2011. The yield based on the new payout is 1.7%.

BNY Mellon (BK) is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. March 22nd the company increased its quarterly dividend 44% to $0.13/share. The dividend is payable on May 10, 2011, to holders of record as of the close of business on April 29, 2011. The yield based on the new payout is 1.8%.

Medicis (MRX) is the leading independent specialty pharmaceutical company in the United States focusing primarily on the treatment of dermatological and aesthetic conditions. March 22nd the company increased its quarterly dividend 33% to $0.08/share. The dividend ispayable on April 29, 2011, to stockholders of record at the close of business on April 1, 2011. The yield based on the new payout is 1.1%.

Innophos Holdings, Inc. (IPHS) is a leading North American producer of specialty phosphate products, offering performance-critical ingredients with applications in food, beverage, pharmaceutical, oral care and industrial end markets. March 21st the company increased its quarterly dividend 47% to $0.25/share. The dividend is payable on April 29, 2011 to holders of record on April 15, 2011. The yield based on the new payout is 1.1%.

American Greetings Corporation (AM) is a a creator and manufacturer of innovative social expression products that assist consumers in enhancing their relationships. March 21st the company increased its quarterly dividend 7% to $0.15/share. The quarterly dividend will be paid on April 21, 2011 to shareholders of record at the close of business on April 11, 2011. The yield based on the new payout is 2.7%.

Raven Industries, Inc. (RAVN) serves the precision agriculture, high performance specialty films, aerospace, and electronic manufacturing services markets. March 21st the company increased its quarterly dividend 12.5% to $0.18/share. The dividend is payable April 15, 2011 to shareholders of record on March 31, 2011. This is the company’s 25th consecutive annual cash dividend increase. The yield based on the new payout is 1.2%.

State Street Corporation (STT) is one of the world’s leading providers of financial services to institutional investors including investment servicing, investment management and investment research and trading. March 18th the company increased its quarterly dividend 1700% to $0.18/share. The dividend is payable April 15, 2011, to stockholders of record as of April 1, 2011. The yield based on the new payout is 1.7%.

U.S. Bancorp (USB) is a financial bank holding company that provides various banking and financial services in the United States. March 18th the company increased its quarterly dividend 150% to $0.125/share. The dividend is payable on April 15, 2011, to shareholders of record at the close of business on March 31, 2011. The yield based on the new payout is 1.9%.

JPMorgan Chase & Co. (JPM) is a leading global financial services firm with assets of $2.1 trillion and operations in more than 60 countries. March 18th the company increased its quarterly dividend 400% to $0.25/share. The dividend is payable on April 30, 2011 to stockholders of record at the close of business on April 6, 2011. The yield based on the new payout is 2.2%.

BB&T Corporation (BBT) is one of the largest financial services holding companies in the U.S. with approximately $157.1 billion in assets and market capitalization of $18.3 billion, as of Dec. 31, 2010. March 18th the company increased its quarterly dividend 6.7% to $0.16/share plus a $0.01/share special dividend per common share. The dividends are payable May 2, 2011, to shareholders of record as of April 8, 2011. BB&T has one of the strongest dividend payouts in the country for banks and has paid a cash dividend to shareholders every year since 1903. The yield based on the new payout is 2.4%.

Cisco (CSCO) is the worldwide leader in networking that transforms how people connect, communicate and collaborate. March 18th the company announced it first cash dividend of $0.06/share paid to shareholders in the company’s history. The dividend is payable on April 20, 2011, to all shareholders of record as of the close of business on March 31, 2011. The yield based on the new payout is 1.4%.

Selecting stocks with increasing dividends is critical for an income growth strategy. The above list contains stocks that recently raised their dividends; it is not a list of recommend buys. As always, due diligence should be performed before buying or selling any stock. For a list of stocks with a long string of consecutive cash dividend increases, see this list.

Full Disclosure: No position in the aforementioned securities. See a list of all my income holdings here.

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- The Best Dividend Stocks In The World

(Photo Credit)

Dividend Aristocrats constituents exhibit the following characteristics:

• Underlying Indices – S&P 500
• Weighting – Equally weighted; Constituents re-weighted quarterly
• Reconstitution – Reviewed annually in December

Among others, Dividend Aristocrats include these highly recognizable names, with years of consecutive dividend increases shown:

• Clorox Co (CLX) – 32 years
• Coca-Cola Co (KO) – 47 years – [Analysis]
• Exxon (XOM) – 27 years
• Johnson & Johnson (JNJ) – 47 years – [Analysis]
• McDonald’s Corp (MCD) – 33 years – [Analysis]
• Procter & Gamble (PG) – 53 years – [Analysis]
• Wal-Mart Stores (WMT) -35 years – [Analysis]

Members may be deleted during the December rebalance if calendar-year dividends did not increase from the previous year, or intra-year if the stock is removed from the underlying S&P 500.

On December 4th, S&P announced changes to the Dividend Aristocrats Index. Standard & Poor’s will perform the annual reconstitution of the S&P 500 Dividend Aristocrats Index after the close of trading on Friday, December 18, 2009.

The following stocks will be added to the Dividend Aristocrats:

• Brown-Forman Corporation (BF.B)
• Cintas Corp. (CTAS)

The following stocks will be dropped from the Dividend Aristocrats:

• Avery Dennison Corporation (AVY)
• BB&T Corp. (BBT)
• Gannett Co., Inc. (GCI)
• General Electric Co. (GE)
• Johnson Controls Inc. (JCI)
• Legg Mason Inc. (LM)
• M&T Bank Corp. (MTB)
• Pfizer Inc. (PFE)
• State Street Corp. (STT)
• US Bancorp (USB)

As the number of drops vs. adds indicates, the last two years were difficult for dividend stocks, but that is not necessarily a bad thing.  During good times it is easy for companies to increase dividends, and many companies were added to the index. It is during times of adversity that we learn who the real aristocrats are.

Full Disclosure: Long CLX, KO, JNJ, MCD, PG, WMT. See a list of all my income holdings here.

(Photo Credit)

I came across Kimberly Palmer’s article titled “The Future of Social Security: Not Good“. My first response was ‘No duh!’  After giving it more thought, I came to the conclusion that my reaction is probably in the minority.

I suspect most people believe that the U.S. government will not let Social Security fail. This is the same government that deemed certain large companies ‘too big to fail’ and dragged other unwilling participants into the fray.  BB&T’s (BBT) Chairman and CEO, Kelly King has been very outspoken on how the government has managed the TARP debacle. And now the government is ‘helping’ the auto industry. Watch out Detroit!

The U.S. government has become too big and too ‘helpful’ to the detriment of its citizens. The government should spend more time providing for the common defense and less time promoting the general Welfare (pun intended).

So, what are your retirement plans? Are you going to rely on the government to print your social security check and the money backing it up, or will you choose to take charge of your future and prepare for it? As it is with most things in life, those that prepare for retirement will find more success than those that don’t.  It is really not that hard when you start young.  Here are three simple steps:

1. Live on less than you earn. (another ‘No duh!’ statement)
2. Invest the rest using a sound asset allocation model.
3. Pick solid, conservative, low-cost investments.

Number 3. on first blush may seem complicated, but it doesn’t have to be. For those that don’t want to make investing their hobby, they can focus on a few good funds like Vanguard’s S&P Index Fund (VFINX) and Vanguard’s Long-Term Bond ETF (BLV).

For those a little more adventurous, a strategy based on an article by Richard Jenkins titled “A simple ETF strategy for beginning investors“ has been quite effective over time. Don’t let the “beginning investors” term scare you away. The goal of this portfolio is to provide diversification over a broad allocation of stocks and bonds by holding five ETFs:  iShares Lehman Aggregate Bond Fund (AGG), iShares MSCI EAFE FD (EFA), Vanguard Total Stock Market ETF (VTI),  iShares DJ Real Estate Index (IYR) and iShares DJ Basic Materials (IYM).

For those comfortable in selecting and holding individual stocks, there is nothing like Dividend Stocks to provide a growing income into the future. Dividend stocks found in many dividend investors’ portfolios include companies such as: McDonald’s  Corp. (MCD) [analysis], Johnson & Johnson (JNJ) [analysis] and The Coca-Cola Company (KO) [analysis].

Finally, you can choose not to prepare. In June 2008, I wrote about a retirement-age couple that would never retire because they chose to live life on the edge and always spent a little more than they made. Over the last year the noose has continued to tighten on Bill and Jackie (not their real names).  Due to the economy and health issues work has been hard to come by. Their house is one step away from foreclosure and on the market with no buyer in sight. Bill needs surgery and the family continues to grow weary of providing for them.

Life is a choice. You can choose how you live, but you cannot choose the consequences of how you live.

Full Disclosure: Long AGG, BLV, EFA, IYM, JNJ, KO, MCD, VFINX, VTI. See a list of all my income holdings here.

Kelly King, Chairman and CEO of BB&T (BBT), a large U.S. regional bank and vocal critic of the government’s bank bailout plan, described its participation in the TARP program as “destructive.” King went on to say “Our plan is to repay the TARP funds as soon as it is humanly possible. It creates excessive controls, it has a negative impact on our people and our strategies and it runs a great risk of politicizing the lending process, which is very unhealthy.”

On May 11th, BBT announced that it would sell $1.5 billion of stock and reduce its dividend by 68 percent so that it can repay a $3.1 billion investment. Goldman Sachs & Co (GS), JPMorgan (JPM) and Morgan Stanley (MS) are arranging the stock offering.

Having previously increased its dividend for 37 consecutive years, this is a tough pill for a once-proud Dividend Aristocrat to swallow.  King said the decision marked “the worst day in my 37-year career,” and pledged to increase the payout when he can.  Like most dividend cutters, BBT’s shares plummeted falling over 7.5% on the day of the announcement and another 7.5% on the following day.

BBT wasn’t the only one running from the government’s “help”. Two other large U.S. banks that passed the government’s “stress test” announced stock offerings on Monday to raise capital in order to repay their TARP debt.  U.S. Bancorp (USB), the parent company of U.S. Bank, said Monday that it has launched a $2.5 million public offering of its common stock and Capital One Financial Corp. (COF) also announced a public offering of 56 million shares of its common stock.

As with all individual income stocks that cut their dividends, I immediately sold my entire position in BBT after reading the announcement.

Full Disclosure: No position in the aforementioned stocks.  See a list of all my income holdings here.

In a report issued last Friday, the Congressional Budget Office (CBO) concluded that the Treasury lost more than 25% of the $247 billion it spent as of Dec. 31 bailing out banks, according to a report released on Friday.

The CBO used a modified Black-Scholes option pricing model to value the TARP assets. The calculation was based on the present value of the dividends banks are required to pay taxpayers on the warrants issued in exchange for the funds received. The present value of the warrants was only $183 billion at December 31st, resulting in the Treasury providing a “subsidy” to the banks of $64 billion.

Terms of the TARP agreement require banks to pay back 5% annually in dividends for the first five years, and 9% after that if taxpayers haven’t been repaid. The warrants expire in 10 years. Last Thursday, Lawrence Summers, President-elect Barack Obama’s chief economic advisor, promised that the incoming administration would take steps to improve returns on TARP funds for taxpayers, in part by limiting dividend payouts to shareholders.

Prominent financial companies participating in TARP include:

• American Express Company (AXP)
• Bank of America Corporation (BAC)
• BB&T Corp. (BBT)
• U.S. Bancorp (USB)
• Wells Fargo & Co. (WFC)

Some institutions, such as Bank of America, have returned to the trough to feed again off TARP funds. As dividend investors, we must carefully consider whether or not banks participating in the TARP program should be included in our income portfolios.

Full Disclosure: Long BBT, USB

Here are several big-name companies compounding their dividends by raising their cash distributions to shareholders:

• Honeywell (HON) Boosts Qtr. Dividend 10% to $1.21/Share (3.50%)
  
• AT&T (T) Raises Qtr. Dividend by 2.5% to $0.41/Share (6.05%)
• Waste Management (WMI) to Increase Qtr. Dividend by 7.4% to $0.29/Share (3.48%)
• Boeing (BA) Raises Qtr. Dividend by 5% to $0.42/Share (4.21%)
  
• Eli Lilly (LLY) Increase Qtr. Dividend from $0.47 to $0.49 (5.45%)
  
• ITT (ITT) Management To Recommend 22% Dividend Increase (1.58%)
• BB&T (BBT) Boosts Qtr. Dividend 2.2% to $0.47/Share (6.58%)

LLY was reviewed on 7/7/2008. However, I currently rate it as a 5 Star-Strong Buy. BBT was reviewed on 6/23/2008 with a 4-Star Buy rating.

After running the remaining companies through my D4L-PreScreen.xls model, the Dividend Achiever T with a NPV of MMA Differential of $8,911 is one that I have on my watch list. WMI with a

NPV of MMA Differential of $5,991, BA with a NPV of MMA Differential of $18,730 and ITT with a NPV of MMA Differential of $17,946 are ones worthy of additional consideration. None of the other companies’ NPV of MMA Differentials were close enough to warrant a more complete evaluation.

Disclosure: Long LLY, BBT.

(Photo: Steve Woods)

So what would have happened if I had invested my kids’ college fund following a dividend investing strategy? It is difficult to say exactly, but I can make some assumptions and see where it takes me.

Ground Rules
For simplicity, I will select five dividend stocks and purchase $1,000 in each and put $5,000 in VFINX using the closing price on September 30, 1997. Dividends will be held and reinvested on the last day of the year at the closing price. I will ignore commissions and taxes. Final valuation date is as of the end of November 2008, except for BAC (see below). Information was pulled from Yahoo Finance.

Stock Selection
This obviously is the most difficult portion and requires the most self-honesty. I will try to reason what stocks I would have purchased in 1997 without looking at their performance. Since it was for my kids’ education, I intentionally avoided the more risky stocks, including REITs. Here are the five stocks I selected and my thoughts as to why:

• Johnson & Johnson (JNJ): For me the selection of JNJ and PG were no brainers. JNJ and PG are two stocks that have been cornerstones in virtually every dividend portfolio for decades.
• Procter & Gamble Co. (PG): See above.
• The Coca-Cola Company (KO): This was a little more difficult form an honesty stand-point. Without looking I suspect that Pepsi (PEP) out-performed KO during this period, but I owned KO in the past and would have likely chosen it over PEP.
• Bank of America (BAC): Knowing that BAC cut its dividend, it was another difficult selection from an honesty perspective. Knowing what I know now, I would have selected BB&T (BBT), but BAC was the first bank I purchased, so I will go with it. BAC’s ending valuation date will be October 7th when I actually sold it.
• Consolidated Edison, Inc. (ED): Having exhausted the no-brainers and likely choices, this was by far the most difficult selection. Since it was for my kids’ education, I targeted a safe stock. As such, I went with the first utility that I bought.

One other stock I considered was General Electric (GE). However, in the late 90′s I viewed it more as a growth stock. Let’s build the spreadsheet and crunch some numbers.

Results
First let me say that there is nothing definitive you can draw from this analysis – the scope is much too narrow. However, there are some interesting items to consider that could lead to a deeper analysis. With that said, I was somewhat surprised at the results. It was not a good decade for any of the investments that I looked at. The ones I thought would perform well, did not. Here is a summary of the S&P and the five dividend stocks:

S&P 500 (VFINX)
Appreciation as a % of Invested Basis: -10.44%
Total Shareholder Return: 0.90%
Total Dividends Reinvested: $1,168.53

Dividend Stocks In Total
Appreciation as a % of Invested Basis: -13.10%
Total Shareholder Return: 1.25%
Total Dividends Reinvested: $1,609.95

The dividend stocks earned more dividends than the S&P, but also lost more on invested capital. Overall, the return for the dividend stocks was a little over a quarter percentage point higher than the S&P 500. That somewhat surprised me; I expected it to be more. Looking at the individual stocks was quite interesting and not entirely what I expected:

Johnson & Johnson (JNJ)
Appreciation as a % of Invested Basis: -0.12%
Total Shareholder Return: 1.47%
Total Dividends Reinvested: $177.96

Procter & Gamble Co. (PG)
Appreciation as a % of Invested Basis: -7.41%
Total Shareholder Return: 0.46%
Total Dividends Reinvested: $136.52

The Coca-Cola Company (KO)
Appreciation as a % of Invested Basis: -20.77%
Total Shareholder Return: -0.73%
Total Dividends Reinvested: $163.21

Bank of America (BAC)
Appreciation as a % of Invested Basis: -52.09%
Total Shareholder Return: -4.35%
Total Dividends Reinvested: $270.61

Consolidated Edison, Inc. (ED)
Appreciation as a % of Invested Basis: 6.61%
Total Shareholder Return: 6.33%
Total Dividends Reinvested: $861.66

To be honest, I was surprised at how weak JNJ’s and PG’s performance were over the period. The entire performance of the group was carried by ED. With a -4.35% TSR, BAC actually held up better than I thought it would.

What If..
One case I looked at was substituting BBT for BAC. BBT’s performance was better than BAC’s but not dramatically. Here are the combined results with BBT in place of BAC:

Dividend Stocks In Total – BBT instead of BAC
Appreciation as a % of Invested Basis: -10.05 vs. -13.10%
Total Shareholder Return: 1.56% vs. 1.25%
Total Dividends Reinvested: $1,610.91 vs. $1,609.95

Conclusion
Contrary to my earlier statement, one valid conclusion can be drawn from this exercise. You should always analytically test your beliefs, because they may not holdup under the microscope.

If you want to see the spreadsheet I used to derive the above data, it is available on my Tools page as Div-Investing-vs-SandP.xls.

Full Disclosure: Long VFINX, PG, JNJ, KO, PEP, BBT and ED

1. Be afraid — be very afraid – Instead of looking at how much you can make by buying a stock, examine all the ways that you can lose. Bruce Berkowitz, who manages the Fairholme Fund, swears by this strategy. He tries to think of every possible scenario that can kill a company — and if he can’t find any, then he’ll buy. In today’s environment a case can be made not to buy virtually any company. Consider General Electric (GE), a company that increased its dividend for 32 consecutive years, but chose not to increase it in 2008.
2. Avoid black boxes – Be suspicious of companies you don’t understand or whose financials are opaque. In fact, unless you understand the business model, don’t buy it at all. Buffett has invested in Goldman Sachs (GS) . However, if you don’t understand what GS does, you are better off looking elsewhere for an investment.
3. Invest only money that you don’t need soon – Assume that the near-term market will remain volatile — even after it smoothes out. That approach will prevent you from investing money you need in the near term, and thus protect you from losses you can’t sustain.
4. Ease in – And all of that means you should be suspicious of how your chosen investments will perform initially. When the market’s this volatile, don’t put all of your money into a stock all at once. Instead, put a portion in when you see an attractive opportunity, but save some cash to buy more if it falls. I have had the “pleasure” of purchasing BB&T (BBT) as it declined over the last year. My first block was purchased at $41.27 (July/2007), then $34.07 (November 2007) and finally $30.56 (August/2008). BBT can be purchased now at around $28.
5. Buy at a discount – Make sure you’re buying shares that are actually cheap. Many companies are trading at prices far lower than they were a year ago — but that doesn’t mean they’re cheap. One year ago Exxon (XOM) was trading at over $90. Friday, it closed at $62.36. My buy below price is $40.93. From my perspective, XOM is still very expensive.

The article concluded by saying:

There’s blood in the streets, so if you can handle the volatility, it really is a great time to invest — but invest suspiciously and fearfully. It will do your portfolio good if you do.

Source: Why You Should Fear the Future

Disclosure : Long BBT and GE

Case in point, my income portfolio currently consist of 8 ETFs and 27 individual stocks. Of the 27 individual stocks, only 7 of them would I consider purchasing today based on their valuation. They are listed below along with their buy below price and other information as of 9/12/2008:

AFLAC Inc (AFL) – Yield: 1.65%
Buy Below: $66.75
9/12 Close: $58.60
NPV MMA Diff: $13,075
Concern: The above data assumes a very aggressive dividend growth rate of 20%. With a low yield of 1.65%, AFL needs the high growth rate to be viable. From 1998-2007 the dividend growth rate averaged 22.3% with a low of 11.8% in 2001 to a high of 45.5% in 2007. Another concern is AFL’s currency exposure in Japan, where roughly 75% of the company’s earnings are derived.

BB&T Corporation (BBT) – Yield: 5.72%
Buy Below: $35.79
9/12 Close: $34.05
NPV MMA Diff: $10,573
Concern: BBT’s exposure to the banking industry’s current issues with funding and credit quality.

BP Plc (BP) – Yield: 6.29%
Buy Below: $83.28
9/12 Close: $54.79
NPV MMA Diff: $34,463
Concern: Failure to come to an understanding with Russia over its operations in the region (TNK-BP), inability to diversify away from Russia and terrorism could adversely affect BP’s future performance.

General Electric (GE) – Yield: 4.40%
Buy Below: $32.69
9/12 Close: $26.75
NPV MMA Diff: $8,103
Concern: Slower-than-expected global economic growth, as well as manufacturing and regulatory problems and the potential for higher delinquency rates in GE’s financial services segment.

Paychex Inc (PAYX) – Yield: 3.65%
Buy Below: $49.88
9/12 Close: $34.01
NPV MMA Diff: $149,426
Concern: The highly competitive nature of the outsourcing industry as well as the threat of new entrants into the human resources segment could pose problems for PAYX in the future.

Pfizer Inc. (PFE) – Yield: 6.96%
Buy Below: $27.72
9/12 Close: $18.62
NPV MMA Diff: $56,099
Concern: Patent expirations and pipeline uncertainties could cause PFE significant problems in the future if left unresolved.

Royal Bank of Canada (RY) – Yield: 3.99%
Buy Below: $49.08
9/12 Close: $46.46
NPV MMA Diff: $250,334
Concern: A further weakening of the Canadian economy, which grew at only 0.3% in the June quarter, a prolonged housing-related downturn in the United States economy, and unexpected sharp currency fluctuations.

The buy below price is the minimum of the Mid-2 (as described in Fair Value Data) and price needed to generate the minimum NPV MMA Diff. (as described in Measure What’s Important). As always, you will need to do your own research and reach your on conclusion as to appropriateness of adding any of these securities to your portfolio.

Disclosure: Long in all the aforementioned securities.

When most people hear the phrase “missed opportunities” they tend to reflect on past events and what could have been. By nature I am forward looking, so “missed opportunities” for me is the present and the future.

At some point in the future will we look back on our actions today and refer to them as our greatest missed opportunity? There is a lot of fear today. Fuel prices have soared driving up the prices of everything that is transported. The economy is slowing and some fear that they may lose their jobs. Many are posturing themselves in a defensive stance, moving money out of equities into cash and bonds. With that, consider the following stocks (data as of mid-day 8/27/08):

AFLAC Inc (AFL): Its average P/E and dividend yield between 1998 and 2007 was 18.8 and 0.95%, respectively. It is currently trading with a P/E of 14.8 and a dividend yield of 1.79%.

BB&T Corporation (BBT): Its average P/E and dividend yield between 1998 and 2007 was 15.8 and 3.30%, respectively. It is currently trading with a P/E of 9.1 and a dividend yield of 6.66%.

Consolidated Edison, Inc. (ED): Its average P/E and dividend yield between 1998 and 2007 was 14.5 and 5.47%, respectively. It is currently trading with a P/E of 10.0 and a dividend yield of 5.69%.

General Electric (GE): Its average P/E and dividend yield between 1998 and 2007 was 25.4 and 2.24%, respectively. It is currently trading with a P/E of 13.2 and a dividend yield of 4.39%.

Johnson & Johnson (JNJ): Its average P/E and dividend yield between 1998 and 2007 was 23.9 and 1.77%, respectively. It is currently trading with a P/E of 17.1 and a dividend yield of 2.60%.

Lowe’s Companies, Inc. (LOW): Its average P/E and dividend yield between 1998 and 2007 was 22.0 and 0.37%, respectively. It is currently trading with a P/E of 14.0 and a dividend yield of 1.38%.

Sysco Corp (SYY): Its average P/E and dividend yield between 1998 and 2007 was 26.4 and 1.48%, respectively. It is currently trading with a P/E of 17.4 and a dividend yield of 2.79%.

By most measures, many blue-chip stocks are trading at a historical discount. Are you going to buy now or pay full-price or a premium price later? Unlike the perpetual going-out-of-business sale at the local furniture store, this sale will end suddenly and without warning.

Full Disclosure: Long in AFL, BBT, ED, GE, JNJ and SYY.