The market has been off for two weeks in a row and falling periodically for over a month. A lot of money has moved to the sidelines. Some of it has moved into cash. Other capital has moved to safe-haven bonds, which yield next to nothing.
There's some portion of investors who would like to stay in the equity markets in case there's a post-Labor Day rally, although the economy is making that less and less likely.
The one area where investors may find some comfort is in companies that have stocks with relatively high yields, a lot of cash and high operating margins. Some of these businesses exist in most sectors:
Microsoft (MSFT) will continue to have massive cash flow, perhaps for several years, primarily because of Windows 7 sales. It's likely to remain the "safest" tech stock. Microsoft's stock has a 2.1% yield, and the company has $35 million in cash.
In the restaurant and hospitality business, the clear winner is McDonald's (MCD). Same-store sales continue to grow. The company has a habit of buying back shares and raising its dividend. Its yield is 3%, better than many large-cap corporate bonds.
The consumer goods leader for safe-haven investing is Procter & Gamble (PG), which has a 3.2% yield. Operating profit most quarters is better than $4 billion on revenue that has been running near $20 billion
Exxon Mobil (XOM) is the leader in the energy sector. It has a yield of 2.9%. Operating income in the second quarter was $12.7 billion on revenue of $92.5 billion. Exxon has over $13 billion in cash.
Among telecom stocks, AT&T (T) has an extraordinary yield of 6.3%. Last quarter, it had operating income of $6.1 billion on revenue of $30.8 billion.
At least investors have an alternative to stuffing their cash under a mattress.
Bonds for Beginners
Learn about fixed income investments.View Course »