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6 Climbing High-Yield Dividend-Paying Stocks

Tickers in this article: CAG DOW GE JNJ PEP VALE
NEW YORK ( TheStreet) -- Most self-directed investors should categorize stocks into two primary columns. Column A is dividend-paying stocks , and column B is every other stock that you're not going to buy.

Granted there are a select few that come along every now and then that can be considered for shorter-term capital appreciation, but otherwise sticking with dividend payers is more likely in the long run to increase your portfolio.

Dividend-paying company executives understand they must stay aggressive each quarter or risk being forced to cut the dividend (and upset investors). I believe it's the "in your face" number hanging out there that keeps the team relatively more focused than a company that doesn't pay a dividend. A team focus on bolstering earnings is synonymous with rising share price.

Many investors make the mistake of believing we continue to live in the world of old-school investing. In days gone by, if you wanted a stable high-yield dividend, you bought utilities as a retirement income vehicle.

Today with computers and online access, large and small investors can find dividend-paying companies increasing in price. Having your cake and eating it too is more possible than ever.

Obviously not every dividend-paying stock rising in price is a buy; consequently I search for those that offer a favorable risk-to-reward. Take a look and see if you agree.

CAG Dividend Yield ChartCAG Dividend Yield data by YCharts

Conagra Foods (CAG)

Background: ConAgra Foods has transformed itself into an industry-leading, branded and value-added food company.

52-Week Range : $23.64 to $30.55

Price to Book : 2.7

Earnings Payout Percentage : 63%

Conagra Foods pays $1 annually in dividend payments. The yield based on a recent price is about 3.3%.

Not surprisingly, the last reported short interest is only 1.6% of the average trading float. Short sellers are the smart money, and with shares now trading near $30, most of the short sellers are under water.

In the last 52 weeks, the shares are about even with a small gain of 1.2%. Conagra Foods has an average analyst target price of $33.60. I believe a price target of $36 in the next 12 months is reasonable. After adjusting for dividend payments, if my price target is met, ConAgra will return a gain of over 20%. Not a bad first-year start with most any investment.

If ConAgra continues at the current rate of appreciation in the last year investors may anticipate an annual return over 4%. CAG Payout Ratio TTM ChartCAG Payout Ratio TTM data by YCharts
PEP Dividend Yield ChartPEP Dividend Yield data by YCharts

PepsiCo (PEP)

Background: PepsiCo engages in the manufacture and sale of snacks, carbonated and non-carbonated beverages, dairy products and other foods worldwide. The company was founded in 1898 and is headquartered in Purchase, N.Y.

52-Week Range : $62.15 to $73.66