5 Great Stocks With High Sustainable Dividends

by: Vatalyst

This article brings an account of five high dividend stocks which are an attractive buys this week. The entry to market has been easier this fiscal year, but the choice regarding which stocks to buy has been a tricky question. The analysis of each stock is presented while keeping this in mind:

Illinois Tool Works Inc. (NYSE:ITW):

Illinois Tool Works has declared a 6% dividend on its stock, as recently heard across the channels. Although ITW does not depict a much promising picture in the short term, this statement should be reconsidered if one considers the long term horizon. The 52 week low price recently hit by ITW presents the perfect time to go long, although ITW is not a perfect buy for those seeking short term yields. However the long term horizon is quite better; and meanwhile you get the 3.33% dividend yield. Illinois Tool Works acquired Despatch industries; which will also help it to diffuse its investments in the energy sector. ITW had a decent EPS over the last four quarters at $3.79, which is next to the $4.7 ttm EPS of Cooper Industries plc (CBE). General Electric (NYSE:GE) and Manitov Co Inc. (NYSE:MTW) had a 1.27 and -0.87 EPS (ttm), respectively. Earlier this morning, ITW was recorded to be the 7th most traded stock in the NYSE (NYSE:NYX). A recent dividend stock analysis also shows ITW as a strong stock option, which is rarely available for purchase when the market is up. Hence, it is a good time to be long ITW, since it is expected to benefit significantly when market improves.

Southern Company (NYSE:SO):

The energy sector giants have also seen sudden swings in the stock prices and have not been able to manage their positions in the market. SO is slightly different, as it is in the recovering process at the moment. Southern Company recently hit its 52 week high at $41.30. Although the market has been bearish as a whole, the energy sector has outperformed the S&P index constantly over this year. SO combined with Chesapeake Energy (NYSE:CPK) and York Water (NASDAQ:YORW) build up a 3 stock defensive portfolio which can easily beat the S&P 500. Dividend payout is moderate and then the energy sector also has its own attractions. SO recently moved into the nuclear energy technology and also owns some local telecom company which is working out quite well. Hence the average yields for SO can be expected to be quite well in the following quarters. SO has been a near average performer amongst its industry sector, and has returned 15.61% in the last 4 weeks while 13.21% in the last 52 weeks. It is a nice buy to outperform the S&P with limited risk involved as the stock’s volatility has been lower relative to the competitors.

MFA Financial, Inc. (NYSE:MFA):

Mortgage REIT stocks have witnessed serious volatility over the past few months. Thanks to the rumors of S&P lowering the debt ratings and fluctuations of interest rates, the headlines have been filled up with the turmoil of these stocks. MFA Financial is one of these stocks. It is a nice buy and sell at this point of time since the stock witnesses sudden collapses and regains at many instances. During a single day, the market has witnessed the whole mortgage REIT stocks loosing almost all the value of their stocks and then regaining it in the same day. MFA is trading at $7.16 and is expected to grow more than $1 in the following year. The dividend yield is 13.4% which is quite attractive. The stock price has rotated about the same figure over the 52 weeks, $6.71 being 52 week low and $8.64 being the high. The same is the case with Annaly Capital Management Inc., (NYSE:NLY) (Current: $17.29 Low: $14.05 High: $18.79), Hatteras Financial Corp (NYSE:HTS) (Current: $26.61 Low: $23.80 High: $31.98) and Capstead Mortgage (NYSE:CMO) (Current: $12.66 Low: $10.78 High: $13.95). The REIT sector is now a buy.

HSBC Holdings (HBC):

HSBC has faced issues over the past 3 years and has faced constant declines since then. The stock is trading at $41.96 close to its 52 week low figure of $40.41. HSBC's USA division has reported losses over the last 3 years and the stock has declined with the same. However last quarter HSBC USA reported profits after 12 quarters while the company as a whole has still not been able to report profits. While the investors can hope some good after this report, another glimpse of good arises from the fact that HSBC finance has reported the least amount in bad debts over a period of 3 years. HBC can thus be expected to gain momentum in this fiscal year, although the chances are rare since there is still a long way to go. On the other hand, HBC started around $47, touched $57 and again fell to $40.41. The stock is trading at its lowest in 52 weeks and a moderate buy is good at the moment, while there is still a hope of recovery. The competitors include Barclays PLC (NYSE:BCS), Citigroup, Inc. (NYSE:C), and Royal Bank of Scotland Group plc. (NYSE:RBS) who had lower earnings per share and yield percentage over the last 52 weeks.

WindStream Corporation (NASDAQ:WIN):

With 8.55% dividend yield WindStream is the 3rd most attractive and yielding stock in the S&P 500 index just after Frontier Communications Corporation (NYSE:FTR) and CenturyLink Inc. (NYSE:CTL) who have a 10.92% and 8.56% dividend yield respectively. This can be attributed towards falling prices, but good dividend yield protects you from the impact of falling prices. Hence, WIN becomes an option for those newcomers who seek some earlier income. An analysis of historical prices shows that WIN was one of the seven most yielding stocks since last 4 quarters. WIN was being traded around $14.5 when the market was stable in 2007, starting from a good $16 stock price in 2005. The price decrease has actually pushed dividends higher than before, and the stock has become a good option for investors seeking income through the market.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.