If you're the type of investor who prefers a steady dividend and would like to avoid higher volatility, then you've come to the right place. Here we have three companies that carry low volatility and deliver solid dividends.
First up, we have the closed-end fund Credit Suisse Asset Management Income Fund Inc. (CIK), from Credit Suisse. Its name is a mouthful, I know, but that's about the most exciting part about this ticker other than its dividend (and I mean that in a good way). Credit Suisse is a Swiss financial institution that dabbles in lending, insurance, and asset management. With headquarters in Zurich, it was founded way back in 1856 with the idea of providing funding to keep the Swiss railways privately-owned instead of state-operated. Credit Suisse was recognized by Fortune Magazine as one of the most admired companies in the world. They have a top-flight team over there managing this fund.
- CIK has a beta of just 0.4
- If you take away a very brief descent to $3.51 last November, CIK has a 6-month range of $3.93-4.22, and hasn't dipped below $4.00 since last December
- CIK delivers an annual dividend yield of 7.8%
- Stability, stability, stability
The Bottom Line: CIK is a safe place to park your money and live off the generous 7.8% dividend. Its low-volatility will allow you to have peace of mind knowing that you're not going to lose value on share price just to break even collecting a dividend. Also, remember that its low volatility goes both ways. We can comfortably expect it to not lose share price value, so we can also assume its share price isn't going to make a big move upward either. The beauty of CIK lies in its stable price and high dividend return.
Now, let's look at PDL BioPharma, Inc. (PDLI). These guys sold all of their exclusive drug and product lines in 2007 to focus strictly on being a research & development biotech firm. They lease their technology and processes to other pharmaceutical companies, and currently hold a patented process of creating humanized antibodies that can be found in treatments for cancer and other diseases.
- PDLI, like CIK, also has a beta of 0.4
- It is currently trading right in the middle of its 52-week range, which is $6.03-8.43
- It trades at a low P/E ratio of 5.04, with a forward P/E ratio of 3.8
- PDLI offers an annual dividend yield of 8.2%
- Insider transactions show a 23.15% increase in ownership in the past six months
The Bottom Line: PDLI is trading for cheap, and its 8.2% dividend is enticing. The share price will, for better or worse, fluctuate more than that of CIK. It has a promising upside if it can continue to develop successful products as it has in the past. Also, because it doesn't directly manufacture its own drugs, it removes a significant amount of risk that is inherent in the biotech/pharmaceutical industry (example: (AFFY), whose share price fell 700% overnight due to one of its experimental drugs being recalled after causing a few deaths).
Last, but certainly not least, I present to you ARMOUR Residential REIT, Inc. (ARR) ARR, according to their own bio, "invests in hybrid adjustable rate, adjustable rate and fixed rate residential mortgage-backed securities issued by or guaranteed by U.S. Government agencies or U.S. Government sponsored entities." Real estate has been coming back strong, and here you have an opportunity to take advantage of that and still have high liquidity.
- ARR has a beta of 0.57
- ARR has slightly over $2 of cash for every share, which shows that not only are they making money, but also that they have enough left over to reinvest and, even better, pay dividends
- My favorite part: It provides an annual dividend yield of 13.2%
- ARR has an EPS growth this year of, drum roll please, 739.12%
The Bottom Line: ARR shows increasing profitability and has admirable upside potential. The dividend of 13.2% is very attractive and the share price could be headed up soon (it has a 1-year price target of $7.25, which is no small increase given an already generous 13.2% dividend yield). ARR is a stock that is currently ripe for buying now and holding for years to come.