Given that the expected return of a bond is its interest rate, fixed income investments are not very attractive for generating meaningful returns, notes Chuck Carlson, dividend reinvestment expert and editor of DRIP Investor.

After all, who wants to lock in a return for the next 30 years of just 2% per year. That rate won’t even outpace inflation. And do not get me started on rates on savings and checking accounts. I am getting a whopping 0.05% on my checking account. The bottom line is that it is tough sledding to find decent yields.

To be sure, I have never been a fan of “yield chasing.” Yield is a pretty good proxy for risk. High yields can be illusory — oftentimes, the highest yields belong to investments in which the cash flows are in danger of being cut or eliminated and the principal is in danger of evaporating. If you are going to preference yield in your investment search, consider the following:

➤ Do not stretch too far for yield. If you are considering investments with yields above 6%, be aware that there is plenty of risk attached to the cash flows and principal. There is no free lunch, and there is no such thing as a “risk-free” yield of 6%, especially in the current low-interest-rate environment.

➤ Consider investments that have the ability to increase their cash fl ows. In the battle between dividend yield and dividend growth, I usually come out in favor of dividend growth, especially for investors who tend to hold investments for long periods of time.

Dividend growth can turn a small yield into a big yield over time. Dividend growth also helps your cash flows continue to keep pace or even outstrip inflation. Bottom line — I would much rather own a stock yielding 3% but growing its dividend on a regular basis versus owning a 4% yielder with no prospects for dividend growth.

➤ When comparing yields across asset classes, remember that risk levels will differ. For example, you are taking on more risk owning a stock with a 3% yield than a bond with a 3% yield. The expected volatility will be greater with the stock than the bond.

One that has been turning my head in recent months is Philip Morris International (PM). Now, I know there is a big constituency of investors who simply will not own Philip Morris due to the company’s products. However, if you are not one of those investors, you should take a fresh look at these shares.

The company has been rapidly growing its smoke-free products, and this is a major differentiator for the company. Also, keep in mind that Philip Morris focuses on overseas markets, which is a plus. Per-share earnings estimates for 2021 and 2022 have trended higher over the last 60 days.

Philip Morris stock has been behaving quite well in recent weeks and is trading around its 52-week high. Still, I think the stock is misunderstood by a large investor populace.

As more investors understand the transformation at the company, these shares should move higher. The company seems confidant in its future, as the firm recently announced a $7 billion stock buyback program.

The company’s current dividend of $4.80 per share is well covered by earnings, which are expected to reach $6.09 in 2021 and $6.68 in 2022. The current yield of 4.8% is especially attractive in this low-yield environment.

Please note Philip Morris offers a direct-purchase plan. Minimum initial investment is $500. The plan administrator is Computershare (www.computershare.com).

The banking sector has pulled back a bit in recent trading in line with the recent pullback in interest rates. The pullback is setting up a better buying opportunity in banking stocks, including Regions Financial (RF).

I have been a long-time owner of Regions and like the company’s combination of dividend yield (3%) and appreciation potential. Financials are still one of the areas offering reasonable valuations, so I like Regions’ chances to move to a new high in the second half of the year. The stock provides a sort of hedge against rising interest rates.

Regions’ direct-purchase plan has a minimum initial investment of $1,000. The plan administrator is Computershare (www.computershare.com).

A favorite within the utility sector is UGI (UGI), which is the nation’s largest retail propane marketer. The firm also has natural gas and electricity utility services.

The stock has done well of late, and I expect these shares to outpace the broad market in the second half of the year.

Yielding 3%, the company has paid dividends for more than 134 consecutive years. UGI offers a quality play in the utility sector. Minimum initial investment in UGI’s direct-purchase plan is just $50. The plan administrator is Computershare (www.computershare.com)

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