Current Dividend and Yield Plays

"Here are several keys to "right-sizing" dividend and yield plays. You should focus on debt-to-equity, interest coverage ratio and return on assets vs. return on equity. You'll want to seek low debt-to-equity, high interest coverage and high ROA vs. ROE.

A final additional crosscheck is earnings-per-share stability. Does your investment candidate possess high EPS stability? Stocks that score well here are usually defensive, more stable consumer staples plays." (read whole article)

OK, that lost me a long time ago! This is one reason I prefer to analyse macro investments such as indices and commodities - I just wasn't born to be an accountant! However, what the above jargon points to is investing in high grade bond funds.

"Last year the Lehman Aggregate bond ETF (AGG) turned in a fantastic 5% vs a negative 38% for most risky assets, running the gamut from commodities, domestic equities and junk to emerging market equities. A similar level of stability and performance can be expected this year."

Yes, that makes sense now! Hopefully the fund manager will have done all the previously mentioned calculations and have avoided the junk most liable to default. When your bank account is likely paying less than 1% per annum then 5% is a dream.

And if, like me, you thought Lehman Bros was flushed down the toilet some months ago then note that the ETF still exists but is in the safe hands of Barclays Global Fund Advisors - what a relief!