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Although the collapse in 2008 did some damage to the financial sector, it is still a brilliant sector offering excellent profits to investors. The financial companies offer magnificent dividends and are extremely low-priced when compared to other sectors. Although the average volatility of the sector is relatively high, it may return fast and large profits in an upward market. Here is a list of five mid-cap financial stocks paying outstanding dividends and priced with low P/E ratios. All of the companies pay a minimum 4% dividend yield (data derived from Finviz/Morningstar and is current as of July 18):

KKR & Co. (NYSE:KKR): KKR may bid for Acibadem, a Turkish hospital chain. As of July 18, the New-York based company has a market cap of $3.27 billion, a P/E of 8.69 and a forward P/E of 6.57. Analysts expect the company to have a 14.00% EPS growth in the next five years. KKR pays a dividend yield of 4.67%.

KKR returned approximately 69% in a year. Debt-to assets ratio is around 4% for the last five quarters. Earnings increased by 34.52% this quarter. Target price implies a 32% upside potential and the company is trading 17.39% lower than 52-week high. Oppenheimer suggested an outperform rating for KKR, while Deutsche Bank recommend buying. The company is a solid outperformer and can return magnificent profits in the long-term. Here are the recent dividend yields of Kohlberg Kravis Roberts per share:

May 12, 2011

$0.21

Mar 3, 2011

$0.29

Nov 9, 2010

$0.15

Aug 20, 2010

$0.08

Ares Capital (NASDAQ:ARCC): ARCC will announce its Q2 earnings on August 4. The private equity firm, as of July 18, was trading at a trailing ratio of 3.89 and a forward P/E of 10.02. Market cap is $3.20 billion. ARCC had an EPS growth of 17.05% over the last five years, whereas analysts estimate an 8.17% EPS growth for the next five years. With a profit margin of 133.77% and a dividend yield of 8.96%, ARCC is an outstanding pick for dividend lovers.

Earnings increased by 96.45% this year and gross margin is 71.03%. ARCC is doing OK since Feb,2009. ROA is 20.86%, while ROE is 31.24%. Target price implies an about 18% increase potential and the company is trading 10.28% lower than 52-week high. Although debts are increasing sharply, assets outrun them. Analysts give a 1.90 recommendation for Ares (1=Buy, 5=Sell). Following is the recent dividend history of Ares:

Jun 13, 2011

$0.35

Mar 11, 2011

$0.35

Dec 13, 2010

$0.35

Sep 13, 2010

$0.35

New York Community Bancorp (NYB): NYB will report its Q2 earnings on July 21. As of the July 18 close, the company owns a $6.60 billion market cap. P/E ratio is 12.28 and forward P/E ratio is 11.53. Analysts estimate a 6.00% EPS growth for the next five years, which is reasonable given the 2.17% EPS growth of past five years. With a profit margin of 35.29% and a dividend yield of 6.62%, NYB is a superb stock for dividend lovers.

Target price is $18.28, indicating a 21% upside movement potential. The company is trading 19.61% lower than 52-week high. $1000 invested in NYB in Mar, 2009 is about $1890 now. Assets are increasing sharply, while debts are hardly decreasing. Yields had not changed since Apr, 2004. Although the company is not what it once used to be, it can still beat the market. NYB tends to decrease for a while and I believe this is the time to buy. Recent dividend payments per share are as follows:

May 4, 2011

$0.25

Feb 3, 2011

$0.25

Nov 4, 2010

$0.25

Aug 4, 2010

$0.25

Chimera Investment Corp. (NYSE:CIM): Chimera will yield $0.13 per share this quarter. As of July 18’s close, the REIT has a market capitalization of $3.34 billion, a trailing ratio of 5.16 and a forward P/E of 5.51. The company had a 19.18% EPS growth during the last five years, while analysts expect the company to have a 7.33% EPS growth in the next five. Profit margin in 2010 was 71.03%. Chimera pays the highest dividend yield (16.00%) in this list.

P/B is 0.9. Target price is $4.22, which implies a 30% upside potential. Chimera is trading 19.56% lower than 52-week high. Insider transactions for the last six months have increased by 22.33%. The company seems to get rid of its pessimistic atmosphere since Oct, 2008. Insiders have been buying stocks for a while. It is a perfect pick for dividend lovers. Recent dividend history is as follows:

Jun 28, 2011

$0.13

Mar 29, 2011

$0.14

Dec 29, 2010

$0.17

Sep 30, 2010

$0.18

Federated Investors (NYSE:FII): FII announced that it will report its Q2 earnings on July 28, after the market closes. The asset management company has a $2.36 billion market cap, as of the July 18 close. It shows a trailing ratio of 13.53 and a forward P/E of 11.96. Estimated EPS growth for the next five years is 8.08%, which is quite reasonable when its 3.04% EPS growth of last five years is considered. Profit margin was 18.79%, while the company paid a 4.25% dividend in 2010.

Although assets are consistent, the company couldn’t provide a steady downgrading process for its debts as there have been sharp ups and downs. Operating margin is 29.5%. ROA is 17.27%, while ROE is 36.32%. Target price is $23.82, indicating a 5.3% upside potential. The stock is trading 19.43% lower than 52-week high. FII is a profitable stock in the long run. Recent dividend payments are:

May 4, 2011

$0.24

Feb 4, 2011

$0.24

Nov 4, 2010

$0.24

Aug 4, 2010

$0.24

Source: 5 Financial Companies Paying Dividends of 4% or More