First, sluggish U.S. job growth. Then, squabbles in Washington between Demcocrats and Republicans. Now, Hurricane Irene's damage is likely to weigh on the U.S. economy.
The Dow Jones Industrial Average closed up 255 points Monday to 11,539, but if you're a little hesitant to invest some new money in stocks, that's understandable.
The uneven, uncertain U.S. economy, the nation's 14.1 million job shortage, and renewed concern about Europe's government debt have created legitimate questions mark regarding the U.S. and European recoveries.
What's one way to cautiously commit new money to equities? Consider stocks that also offer modest safety via paying a decent dividend, and here are three:
BP Prudhoe Bay Royalty Trust: Dividend Superstar
The trust distributes royalties on 16.4 percent of the first 90,000 barrels per day (bpd) of average daily production per quarter from BP's share of the Prudhoe Bay oil field.
BPT's current annual dividend is $9.46 per share, good for a nice 8.65 percent yield at the current $110.45 trust price.
Investors should not expect an outsized capital gain with BPT: a 5-7 percent annual stock appreciation is the realistic forecast, but shares could just as easily retreat 5% during that period. BPT is a decidedly dividend-base play, hence don't consider BPT if your emphasis is capital gain.
BPT's 1-year stock range is $79.56 to $131.49, and the 5-year stock range is $50 to $131.49.
TransCanada Corp.: Natural Gas Growth and a Dividend, Too
In addition to its a natural gas transmission and storage assets, TransCanada also owns oil assets and electric power generation assets, including wholly-owned power plants.
TRP annual dividend is a solid $1.77 -- good for a 4.17 percent yield at the current $42 50 share price.
Further, Phase 1 of TRP's $12 billion Keystone Pipeline System, with the capacity to transport 435,000 barrels per day (bpd) of crude oil, opened in June 2010. Phase 2 boosted production capacity to 591,000 bpd in February 2010.
Add 380 billion cubic feet of natural gas storage capacity in an era in which natural gas will play a larger role in energy consumption, and one can see why there's considerable upside with TransCanada's shares. Reuters expects TRP to earn $2.20 and $2.44 per share in 2011 and 2012, respectively.
Ferrellgas Partners LP: Promising Propane Play
Low-profile play Ferrellgas Partners LP (FGP) is the second largest seller of propane in the United States -- a fuel primarily used in areas where natural gas in not available or can not be easily transported to.
Ferrellgas will probably post a nice 8-11 percent revenue gain in 2011, after booking a 1 percent rise in 2010. Sales gains will likely be supported by slowly increasing prices for propane.
A company-wide cost cutting program, and FGP's effort to expand its more-profitable cylinder exchange program add to the positive story.
Further, Ferrellgas' dividend is a solid $2 per year -- good for a 9.67 percent yield at the current roughly $21.92 share price. Reuters expects TRP to earn a loss of 22 cents and a profit of 74 cents in 2011 and 2012, respectively.
Dividends Decrease, But Do Not Eliminate, Risk
Keep in mind that all of the above stocks contain moderate risk and are not suitable for low-risk investors.
Safest Pick: BP Prudhoe Bay Royalty Trust (BPT).
Best Pick: (higher risk) TransCanada Corp. (TRP).
Disclosure: L.C. Jacobs of New York, N.Y. reviews stocks on a quarterly, semi-annual, and annual basis.
L.C. Jacobs has no positions in stocks reviewed, but does own federal, municipal, and corporate bonds.