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(Tan Wei Ming)
(Tan Wei Ming)

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10 U.S. dividend stocks held by highly rated fund managers Add to ...

<p>Concerns that a stock market correction is overdue may be turning investors, particularly those near or in retirement, into yield hounds. </p> <p>And since dividends on fixed-income securities are still at historically low levels, with the yield on 10-year U.S. Treasuries at less than 2.5 per cent, they would do best to look for stocks with growing dividends being paid by high-quality companies, both for their yield and their potential share-price appreciation. </p> <p>And given that definition, that means large-cap stocks, as there are really few other places to jump for the investor seeking a secure total return. </p> <p>In addressing that interest, ratings and research firm Morningstar, which tracks the portfolio changes of 26 top-performing mutual funds for its "Ultimate Stock-Pickers" series, screened its funds list. It found the most dividend-focused funds with stocks that pay an annual yield greater than that of the S&P 500's 2 per cent for last year. </p> <p>Pharmaceutical and health-care stocks dominate the list, with five representatives. Although their share-price performances this year are poor, all hovering around break-even (compared with the S&P 500's 11.3 per cent gain), they pay relatively high dividends with the prospect for continued increases given the world's population growth, and the rising demand for more and new types of drugs as the population ages. </p> <p>Consider the highest-yielding stock in the pack, GlaxoSmithKline. The dividend yield is 5.86 per cent and the shares are up 26 per cent over the past 12 months, including this year's pedestrian 1 per cent advance. </p> <p>As one of the world's largest pharmaceutical companies, GlaxoSmithKline's dividend growth prospects and steady cash flow are relatively secure, given its huge list of patent-protected drugs. Its shares have yielded at least 4 per cent annually since 2007. It is scheduled to pay a quarterly 66.3-cent dividend April 12, plus a 15.8-cent special dividend. </p> <p>Here are the 10 most popular high-yielding dividend stocks among Morningstar's Ultimate Stock-Pickers funds, listed in inverse order of highest yield: </p> <p/>

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