- Every investor should diversify by buying bonds or dividend-paying stocks.
- Dividend stocks are more attractive than bonds because of historically low bond yields.
- We think dividend stocks bought by insiders deserve a closer look.
By Jason Seo, CFA
Dividend-paying stocks are a good addition to any investor's portfolio. In addition to the obvious income benefits, these equities can lower the volatility of the overall portfolio due to their defensive business models and disciplined capital allocation policies. Although there are many companies that pay dividends, one can narrow the universe by taking into account other factors, such as valuation multiples or earnings estimates. One source of information that we like to pay attention to are insider transactions, which can be a good signal for outside investors. Here we will look at five stocks with dividend yields above the 2% yield of the S&P 500 that have also witnessed recent insider buying trends.
Investors Real Estate Trust (NYSE:IRET) is a $969.7 million market cap real estate investment trust (REIT) that owns and operates multi-family, office, medical, industrial and retail properties primarily in Minnesota and North Dakota. Similar to other REITs that must pay out the majority of their earnings to shareholders, the company pays a quarterly dividend of $0.13 per share, which equates to an attractive dividend yield of 5.9%. Several directors of the company purchased the shares recently, including Terrance Maxwell, Jeffrey Miller and Jeffrey Woodbuy, who bought 2,543 shares, 1,174 shares and 1,174 shares, respectively, during 2014.
Aircastle Ltd (NYSE:AYR) is a $1.5 billion market cap company that acquires, leases and sells commercial jet aircraft to airlines worldwide. Its quarterly dividend of $0.20 per share, which was recently increased from $0.165 per share in November 2013, is equal to a 4.2% yield. Maurbeni Corp., a Japanese trading house that also holds a seat on Aircastle's board, has an agreement to purchase a 15% stake in the aircraft leasing company for roughly $209 million. It has been buying shares on a regular basis in lots of 30,000 shares since the middle of 2013; its current stake equals 16.5 million shares.
Calamos Asset Management Inc. (NASDAQ:CLMS) is a $262.0 million market cap asset manager that invests in equity and fixed income markets. Its $0.125 per share quarterly dividend is equal to a 4.0% yield. Chairman, CEO and Global Co-Chief Investment Officer John Calamos Sr. has been a heavy and frequent buyer of the stock, purchasing 376,082 shares over the past month and increasing his holdings to 3.0 million shares. He remains the largest shareholder of Calamos, with an ownership stake of approximately 14%.
Oiltanking Partners LP (NYSE:OILT) is a $3.2 billion market cap company that provides integrated terminaling, storage, pipeline, and related services for companies engaged in the production, distribution, and marketing of crude oil, refined petroleum products, and LPG in the U.S. The stock has a dividend yield of 2.4%. Kenneth Owen, President and CEO, purchased 3,000 shares in the company over the past month, increasing his stake to 5,000 shares. Other recent insider purchases include 1,000 shares each by VP and CFO Jonathan Ackerman and former President and CEO Anne-Marie Ainsworth.
GulfMark Offshore Inc. (NYSE:GLF) is a $1.2 billion market cap company that provides offshore marine support and transportation services primarily to companies involved in the offshore exploration and production of oil and natural gas. It first initiated a $1.00 per share annual dividend in December 2012 and quarterly dividends of $0.25 per share in March 2013, where they remain today; this equates to a yield of 2.3%. Director Steven Kohlhagen purchased 2,800 shares of the company earlier in 2014, bringing his stake up to 8,148 shares. Another director, Robert Millard, purchased 61,739 shares in December 2013, increasing his stake to 352,094 shares.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.