7 Dividend Paying Stocks Near 52 Week Lows

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 |  Includes: GPS, GS, MSFT, NEM, NOK, SPLS, TRK
by: NakedValue

Dividends are commonly viewed as an important signal of a company's fiscal strength and of management's outlook. If management is optimistic, they may increase the dividend payout ratio past that of the industry peers. If they are pessimistic, management may constrain the dividend growth or even cut the dividend.

Here is a list of dividend paying stocks trading near 52 week lows. Investors should take a closer look at these companies. Dividend yields imply that they are financially healthy but stock price weakness implies that the market believes the companies' prospects are muted in the near term.


Gap Inc (NYSE:GPS)
Current Price: $18.09
52 Week Low: $16.62
Dividend Yield: 2.3%

The iconic American retail chain has struggled for years to return to its former glory. In the 1990s, the company defined casual wear. While it has continued to expand since then, the company has struggled to maintain its brand popularity, growth and margins.

The Gap has recently been in the news for two very different reasons. It has become an increasingly popular stock among smart money investment managers, including Eddie Lampert and Steven Cohen. While Lampert's position is passive, his hands on retail experience at Sears Holdings (NASDAQ:SHLD) and his large stake at Gap Inc make him a serious potential catalyst for shareholder creation. Investors should pay close attention to any change in rhetoric from Lampert. Unlike the typical financial investor, he has the background and tenacity to affect real corporate change.

The Gap has also stirred headlines because of its weak guidance and continued struggles driving sales and combating margin pressure related to rising input costs. The company's stock recently dropped 17% following management's announcement that second half product costs were expected to rise about 20%. While these pressures are inherent to all retailers, investors are especially frustrated because Gap's struggles seem worse than the market's, even though it should have the network, brand and leverage to mitigate some of these pressures.

GPS trades with a trailing P/E of 9.77 and a forward P/E of 10.24. The company has a PEG ratio of 1.4, a price / sales of 0.72 and profit margins of 7.76%.

Investors should closely monitor this stock. Its brand value makes it one of the few retailers that can truly expand globally, but its operational execution has been problematic. Any major change in the organization should drive the stock higher.


Microsoft Corp (NASDAQ:MSFT)
Current Price: $24.05
52 Week Low: $22.73
Dividend Yield: 2.6%

For all of its faults, Microsoft is still one of the most important companies in the world. While Apple's (NASDAQ:AAPL) advertising campaigns brilliantly paint Microsoft as the boring "other," the truth is that even though Apple is now the biggest technology company in the world, with its $85 billion in revenues surpassing Microsoft's revenues of $68.6 billion, Microsoft Windows is still the world's dominant operating system. In addition, Microsoft Office is still the essential software for business users. This alone gives Microsoft a strong foothold among enterprise users, despite the efforts of competitors like Google (NASDAQ:GOOG) and Apple.

While Microsoft has struggled to develop its consumer business, there is reason for optimism. The company's ownership stake of Facebook gives it a potential advantage negotiating for the popular social media site's search traffic. In addition, Microsoft's recent deal with phone maker Nokia (NYSE:NOK) was a stroke of genius. It gave the software giant a fixed risk partnership with a global consumer electronics giant that has a proven track record of success.

MSFT trades with a trailing P/E of 9.50, a forward P/E of 8.63 and a PEG ratio of 0.94. The company also sports a sizeable profit margin of 31.7% and a return on assets of 18.6%.


Newmont Mining (NYSE:NEM)
Current Price: $55.00
52 Week Low: $50.05
Dividend Yield: 1.40%

Gold bulls should take a closer look at this miner. With operations in the U.S., South America, Australia, Indonesia, Africa, Canada and Mexico, it is a truly global operation. At the end of 2010, Newmont had 93.5 million ounces of proven and probably gold reserves and 9.42 billion pounds of proven and probable copper reserves. In 2010, average production costs were $617/oz of gold and $1.02/lb of copper.

As gold continues to trend higher, it doesn't make much sense for miners to trade near 52 week lows. In many ways, gold itself is subject to a growing supply, but instead of Ben Bernanke manning the Fed printing presses, it's miners like Newmont increasing the world collection of gold. The company does not hedge its mining output, and as such, it is a leveraged bet on gold and copper prices.

NEM trades with a trailing P/E of 12.24 and a forward P/E of 11.98.


Nokia Corp (NOK)
Current Price: $6.53
52 Week Low: $6.45
Dividend Yield: 6.90%

This a time of transition for Nokia Corp and as such, there is a strong possibility that Nokia will have to reduce its dividend in the near future. We previously included Nokia in our article (Buyer Beware: 3 Stock Dividends That Could be at Risk ) because we thought its dividend was susceptible to a reduction. Among other things, we highlight that the company scaled back its true dividend paying capacity significantly by eliminating its share buyback program despite opportunities to buy the stock at much lower levels.

Some bulls views think there is a floor on Nokia's stock price because of the potential upside from its Microsoft partnership, or from a Microsoft buyout. We agree, but we do not think that this changes the risks to income investors interested in Nokia primarily because of the dividend.

NOK trades with a trailing P/E of 9.30, a forward P/E of 13.6 and a price/book of 1.20.


Staples, Inc (NASDAQ:SPLS)
Current Price: $16.35
52 Week Low: $16.01
Dividend Yield: 2.40%

Staples is an office supply retailer with 2,281 superstores throughout the United States, 325 stores in Canada and lesser exposure globally. From fiscal 2006 to fiscal 2010, Staples grew its revenues from $18.16 billion to $24.55 billion. In addition, it also expanded its store footprint from 1,884 to 2,281.

SPLS trades at a trailing P/E of 12.85, a forward P/E of 10.01 and a PEG ratio fo 0.81. The business is a low margin business, and as such, SPLS reported profit margins of 3.62% and return on assets of 7.3%.

Investors should pay close attention to this stock. The office supply retail industry may finally be ripe for another round of consolidation. If that is the case, insiders at Staples have strong incentive to seek a change of control. According to the 2010 Proxy, CEO Ronald Sargent stands to earn $35.9 million following termination resulting from a change-in-control. Payments for other top executives range from $6.76 million to $10.9 million.


Speedway Motorsport (NYSE:TRK)
Current Price: $13.73
52 Week Low: $12.80
Dividend Yield: 2.80%

This company operates assets across the United States. Its properties include: Atlanta Motor Speedway, Bristol Motor Speedway, Charlotte Motor Speedway, Infineon Motor Speedway, Kentucky Motor Speedway, Las Vegas Motor Speedway, New Hampshire Motor Speedway and Texas Motor Speedway. These properties account for a total of 870,000 in permanent seating capacity, 846 luxury suites and 8,920 acres.

Between 2006 and 2010, revenues have declined from $562.1 million to $502.2 million. This drop was mainly attributed to a sharp decline in admissions revenues. NASCAR broadcasting revenues have actually increased consistently during that period, and should provide a solid floor on the price of the stock. TRK trades with a trailing P/E of 16.9 and a forward P/E of 11.9. It has a PEG ratio of 2.65 and a price / book of 0.67.

According to the most recent proxy statement, directors and executive officers held 71.6% of common stock. Investors should view this concentrated ownership as a risk because it will limit the potential for change and it creates the potential for a misalignment between the best interests of controlling shareholders and passive minority shareholders.

While the company is clearly sensitive to consumer demand and rising energy prices, it is also an interesting bet on the popularity of NASCAR. At these valuations, investors should take a closer look at this unique stock.


Goldman Sachs Group (NYSE:GS)
Current Price: $132.98
52 Week Low: $129.50
Dividend Yield: 1.0%

Talk to any professional financial market participant and they will tell you that Goldman Sachs is the smartest company in the room. But at the moment, the investing public wants nothing to do with them. While this is largely related to the general market negativity over future financial growth, there is also some stock specific trepidation. This caution isn't just constrained to retail investors. For example, Eric Mindich's fund Eton Park has sizeable positions in financial companies such as Bank of America (NYSE:BAC), Citigroup (NYSE:C), JP Morgan (NYSE:JPM) and Morgan Stanley (NYSE:MS) but does not own a share of Goldman Sachs. Why is this notable? Well, not only is Eton Park one of the largest hedge funds in the world, Mindich also built his reputation at Goldman Sachs.

Some of these fears could be related to the notion that the government is still looking for ways to discipline and influence these companies. For example, Fox Business news reported that Goldman Sach's CEO Lloyd Blankfein's tenure at the firm is essentially contingent on decisions by the U.S. Justice Department. While this may or may not be the best thing for the financial markets, it is clearly a cloud over Goldman.

GS trades with a trailing P/E of 14.8, a forward P/E of 7.1 and a price/book of 1.0.


Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GS, MSFT, NOK, SPLS, TRK, GPS over the next 72 hours.