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It's Time to Take Money Off the Table: Here's Where to Begin

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Sell trading positions, buy long-dated out-of-the-money puts, or move into "safer" dividend plays.

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If you want to maintain exposure to stocks in a correction, or hedge by staying in some stocks in case a pullback does not play out, it makes sense to own "steady Eddie" dividend payers that can hold up better. They also continue to pay you, despite pullbacks. Here's a quick look at three stocks, all of which I own.

Philip Morris, Buy Below $88.50

Philip Morris has done very well since I first suggested it in early January 2011. It is now up 57% compared to 14.6% gains for the S&P 500. But I still like it at $88.50 or below. This is a solid stock for capital appreciation and income. Philip Morris has the international rights to extremely popular cigarette brands like Marlboro, which makes it a play on emerging market economic strength and the emergence of a middle class in emerging markets. Both of these are multi-year, long-wave trends, which I believe are worth getting exposure to, as long as you don't have moral qualms about owning a tobacco company. It pays a 3.7% yield.

McDonald's, Buy Below $88

McDonald's has pulled back from around $102 earlier this year, to trade recently at about $88, as investors worry about problems in Europe. Typically, though, McDonald's can pick up market share during economic slowdowns. The reason: It is so big that it has power over suppliers to keep costs down. So it can entice consumers with discounts better than competitors can. Behind the scenes, its "Innovation Center" test kitchen should continue to roll out popular products. It pays a 3% yield.
No positions in stocks mentioned.

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