Small error there. A stock's P/E is a measure of how cheap or expensive a stock is, not it's dividend yield.
As of yesterday, Procter and Gamble (symbol PG) had a P/E of 19.4 and a dividend yield of 3.22%.
Buy stocks in companies that make real products, are well run and stable.
Agreed. Many believe that such companies are good inflation hedges as long as inflation stays under 7% or so.
You are right about the difference between dividends and yeild, but retained earnings can be reinvested. Digital Equipment Corporation “reinvested” all profits for about thirty years (and they were *very* profitable). The problem was, by the time they decided to start paying dividends, they were no longer profitable and are no longer around, although there are some greying HP employees in Maynard who will help you mantain your VAX.