Today, our analysis includes five profitable stocks (and one fund and one trust) with the lowest possible risk: An ETF, a REIT, a drug manufacturer, a communication equipment company and a cigarette company. Risk-averse investors who invest in stocks to earn higher yield than T-bills can benefit from this article.
iShares MSCI Brazil Index (EWZ)
EWZ stock is being traded in a 52-week range of between $55.95 and $81.77. Current price of EWZ stock is around $61.
Recently, the decision by Brazil to cut interest rates to control its soaring inflation seems unnecessary. Although, there are chances that it may gear up Brazilian business and will increase real returns for the stock holders which ultimately might increase the value of EWZ stock. Thus, investors may buy in anticipation of a sudden price rise for this ticker in the future.
Moreover, EWZ stock demonstrates a low price-to-earnings ratio of 7, and a very lucrative yield of 5.56%. EWZ can certainly be an excellent long term choice for investors who are planning their portfolios for retirement.
MFA Financial, Inc. (MFA)
When government bonds and CDs are yielding interest rates below inflation levels lately, REITs are becoming more popular day by day with their higher dividend yields. Higher dividends have attracted general investors undoubtedly because of low interest rates yield of government bonds and CDs. MFA is one of the top ten tickers with a dividend yield of 10% or higher. Now, this stock yields 14% vs. CIM’s 16.46%. But technically for investors looking for non-agency mortgage exposure, I don’t recommend CIM; rather MFA is a good ticker.
Current market capitalization of MFA calculated using shares outstanding is $2.50 billion and current stock price is $7.02. The stock has been trading in a 52-week range of between $6.71 and $8.64.
MFA stock’s earnings-per-share is 0.94 vs. industry’s 0.47. Its price-to-earnings ratio is 7.25 and price-earnings-to-growth ratio is -28.36, representing a very low stock value for a high dividend ticker. Interestingly it has profit margin and return on equity of 91.34% and 12.08% respectively. Also current dividend payout ratio of MFA stock is 91%. I recommend MFA Financial, Inc. as a ‘buy and hold’ for retirees as a safe and high yield ticker.
GlaxoSmithKline plc (GSK)
GSK stock is trading within a 52-week range of between $36.28 and $45.34 and is selling at around $41 now. This stock price is less volatile. Currently total market capitalization of GSK is $104.94 billion.
Warren Buffett's Berkshire Hathaway (BRK.A) owns 1,510,500 shares of GSK. Investors can choose GSK to be profitable. For its steady income flow and less volatile price, long-time investors may choose GSK stock for their portfolios. Thus, risk-averse investors including retirees can get benefited with this stock for sure.
Currently GSK stock’s earnings-per-share of 2.03 is above industry average, but less than Novartis AG (NVS) at 4.24. GSK stock’s weak price-to-earnings ratio is 20.25 vs. NVS’s 13.08. Besides, GSK stock’s price-earnings-to-growth ratio of 0.68 indicates that the stock is undervalued and cheap enough to buy now. GSK has profit margin and return on equity of 11.82% and 36.26% respectively.
Moreover, the payout ratio of 105% and yield of 4.90% represent the stock’s actual return for the retirees who are willing to buy for their retirement portfolios. Over the last 5 years GSK has increased its dividend by 28%. So, I certainly rate GlaxoSmithKline stock as a buy for retirees.
Nokia Corporation (NOK)
NOK stock has been trading between a 52-week range of $4.82 and $11.75. Now, it is traded at around $6. Current market capitalization of NOK ticker is $22.32 billion.
Nokia Corporation (NOK) might be nervous, after all Google (GOOG) has acquired Motorola Mobility (MMI) lately and the upcoming competition should be something newsworthy. Besides, Nokia fell to the #5 position in Western Europe’s smartphone market with market share of 10.8% recently. As a result, its stock price declined from around $11 to about $6. It’s a clear decline for Nokia. But maybe Nokia will make the success work indeed.
NOK stock has profit margin and return on equity of 2.94% and 5.48% respectively. Unfortunately, NOK stock’s price-to-sales ratio of 0.36 is poor than Sprint Nextel Corp. (S) stock’s 0.29. Also, its price-earnings-to-growth ratio is 3.0 vs. ERIC’s 1.19 and MMI’s 4.75.
However, earnings-per-share of NOK stock is 0.48 where S stock has a negative earnings-per-share of -1.05 unexpectedly. NOK stock has a dividend payout ratio of 110.0%. Though it’s not an undervalued stock, it has a high yield of 7.50% lucrative for retirees. Thus, I rate NOK stock as a buy,
Altria Group Inc. (MO)
MO’s current market capitalization is $54.62 billion. MO stock has traded highest at $87.81 in the last five years. Lately, however, shares traded in a 52-week range between $23.20 and $28.13. Now, the price of this stock is around $26. The big stock price decline happened in March, 2008. Unfortunately, MO stock price fell from around $74 to $21 in a space of seven days and still the price remains below $30 range.
The stock has an annualized average gain 13% over the past decade; demonstrating long-time investors would face massive capital gains with this stock.
MO’s profit margin and return on equity are 20.74% and 74.44% respectively. Its earnings-per-share of 1.64, price-to-earnings ratio of 16.07, and price-to-sales ratio of 3.38 represent overvaluation of MO stock. Besides, more accurately its price-earnings-to-growth ratio of 2.13 is highest among all the competitors including LO, and RAI meaning the stock’s weak performance.
However, its revenue was recorded $16.54 billion for the last fiscal year and the quarterly statements were published recently in June, 2011. Currently MO’s dividend payout ratio is 93.0% and dividend yield is quite attractively 6.10% which is a good yield for a cheap priced stock for retirees who are willing to invest for long-time. Undoubtedly, I rate Altria Group as a buy.