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About half of the 3,000 companies included in the Russell 3000 index pay dividends. As a matter of fact, 1,534 of these companies pay dividends. The chart below presents the current annual dividend yield distribution among the Russell 3000 companies.


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Data: Zacks

Russell 3000 index

Russell Investment explanation:

The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

In my previous post, I tried to determine if the five stocks that have the highest dividend yield among the stocks included in the Russell 3000 index are a bargain now. In this article, I try to determine if the five Russell 3000 second-best dividend yielders are currently a bargain.

In this article, I will give the corresponding fundamental parameters for these five companies and my own opinion about them. Nonetheless, these data and my opinion should only serve as a basis for further research. All the data for this article were taken from Yahoo Finance and finviz.com on January 18, after the market close.

The table and the chart below present the top five second-best dividend yielders, their forward annual dividend rate, the forward yield, the payout ratio and the dividend rate of growth for the past five years.


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California First National Bancorp (NASDAQ:CFNB)

California First National Bancorp operates as a bank holding company for California First National Bank and California First Leasing Corp that provides leasing and banking services in the United States.

California First National Bancorp has a very low debt (total debt to equity is only 0.01) and it has a trailing P/E of 20.53. The forward annual dividend yield is very high at 14.10%, and the payout ratio is very high at 289.5%. The annual rate of dividend growth over the past five years was very high at 36.1%.

CFNB has a total cash per share of $4.35 and almost no debt at all, which should be enough to sustain dividend payments of $2.20.

The very rich dividend and the fact that the stock is trading way below its book value (price to book value is only 0.82) are all factors that make CFNB stock quite attractive.


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Data: Yahoo Finance


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Chart: finviz.com

Ellington Financial LLC (NYSE:EFC)

Ellington Financial LLC is a specialty finance company that specializes in acquiring and managing mortgage-related assets.

Ellington Financial has no debt at all, and it has a very low trailing P/E of 5.54 and a very low forward P/E of 8.33. The price to free cash flow is also very low at 3.03. The forward annual dividend yield is very high at 11.67%, and the payout ratio is at 57.7%.

EFC has a total cash per share of $6.93 and it is expected to post a profit of $4.79 a share in the current year and $2.88 in the next year, which should be enough to sustain dividend payments of $2.80.

The EFC stock is trading 3.97% above its 20-day simple moving average, 7.74% above its 50-day simple moving average and 15.18% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

Analysts recommend the stock. Among the six analysts covering the stock, one rates it as a strong buy , four rate it as a buy and one rates it as a hold.

The compelling valuation metrics, the very rich dividend, the analysts' recommendations, the fact that the stock is in an uptrend and the fact that the stock is trading way below its book value (price to book value is only 0.79) -- make EFC stock quite attractive.


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Data: Yahoo Finance


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Chart: finviz.com

KCAP Financial, Inc. (NASDAQ:KCAP)

Kohlberg Capital Corporation is a private equity and venture capital firm specializing in mid market, buyouts, and mezzanine investments.

Kohlberg Capital has a low debt (total debt to equity is 0.43) and it has a very low forward P/E of 10.09. The average annual earnings growth estimates for the next five years is quite high at 15%. The forward annual dividend yield is very high at 11.21%, and the payout ratio is very high at 324 %.

KCAP has a total cash per share of $0.09 and it is expected to post a profit of $0.87 a share in the current year and $1.02 in 2013, which should be barely enough to sustain dividend payments of $1.12.

The KCAP stock is trading 5.69% above its 20-day simple moving average, 14.32% above its 50-day simple moving average and 33.03% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend.

The cheap valuation, the very rich dividend and the fact that the stock is in an uptrend are all factors that make KCAP stock quite attractive.


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Data: Yahoo Finance


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Chart: finviz.com

MCG Capital Corporation (NASDAQ:MCGC)

MCG Capital Corporation is a private equity firm specializing in investments in middle market companies.

MCG Capital has a relatively low debt (total debt to equity is 0.66) and it has a very low forward P/E of 9.88. The price to free cash flow is also very low at 1.15, and the average annual earnings growth estimates for the next five years is at 10%. The forward annual dividend yield is very high at 10.99%, and the annual rate of dividend growth over the past five years was negative at -22.3%.

MCGC has a total cash per share of $0.91 and it is expected to post a profit of $0.25 a share in the current year and $0.46 in the next year, which should be barely enough to sustain dividend payments of $0.50.

The cheap valuation, the very rich dividend and the fact that the stock is trading way below its book value (price to book value is only 0.88) are all factors that make MCGC stock quite attractive.


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Data: Yahoo Finance


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Chart: finviz.com

Vector Group Ltd. (NYSE:VGR)

Vector Group Ltd., through its subsidiaries, engages in the manufacture and sale of cigarettes in the United States.

Vector Group has a high trailing P/E of 61.80 and the average annual earnings growth estimates for the next five years is at 11%. The forward annual dividend yield is very high at 10.36%, and the payout ratio is very high at 632%. The annual rate of dividend growth over the past five years was at 1.0%.

VGR has a total cash per share of $3.25 and it is expected to post a profit of $0.33 a share in the current year and $0.74 in the next year, which should be barely enough to sustain dividend payments of $1.60.

I would rate VGR stock as a hold.


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Data: Yahoo Finance


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Chart: finviz.com

Source: 5 Russell 3000 Second-Best Dividend Yielders, Are They Bargain Stocks Now?