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Two factors are driving renewed investor interest into dividend-paying stocks. One is the high volatility in the global stock markets, as dividend stocks have been more stable compared to many stocks that don't pay a dividend. The other reason is because the Federal Reserve plans to keep interest rates at very low levels (near zero) for about two more years. Thanks to the market correction, investors have a chance to lock in very high yields with these stocks and could also see substantial capital gains as well:

Cogdell Spencer, Inc. (NYSE:CSA) is a real estate investment trust that primarily owns health care related properties such as medical offices. Like most stocks, this one has dropped during the market correction and now offers an exceptional yield of about 10%. Before the market correction, this stock was trading around $5.60 in early August. Since this REIT invests primarily in health care properties, the revenues and dividend are likely to be more stable. This stock is very oversold, has a generous dividend and is likely to rebound soon.

Here are some key points for CSA:

  • Current share price: $4.03
  • The 52 week range is $3.84 to $7.02
  • Earnings estimates for 2011: about 35 cents per share
  • Earnings estimates for 2012: about 44 cents per share
  • Annual dividend: 40 cents per share which yields about 10%

Chimera Investment Corporation (NYSE:CIM) is a REIT that invests in residential mortgage-backed securities, and both commercial and residential mortgage loans. With a yield of about 18%, and a share price below book value, this looks like a great buying opportunity.

Here are some key points for CIM:

  • Current share price: $2.90
  • The 52 week range is $2.62 to $4.36
  • Earnings estimates for 2011: 60 cents per share
  • Earnings estimates for 2012: 59 cents per share
  • Annual dividend: 52 cents per share which yields 18%
  • Book value: $3.35 per share

Merck and Company, Inc. (NYSE:MRK) is a global pharmaceutical giant. Pharmaceutical products are in demand even when the economy is weak and this is why investors often seek drug companies as a safe harbor in tough times. This stock has dropped from recent highs of about $36. I would consider buying Merck shares on any significant weakness.

Here are some key points for MRK:

  • Current share price: $32.36
  • The 52 week range is $29.47 to $37.68
  • Earnings estimates for 2011: $3.74 per share
  • Earnings estimates for 2012: $3.85 per share
  • Annual dividend: $1.52 per share which yields 4.8%

Annaly Capital Management, Inc., (NYSE:NLY) is a mortgage real estate investment trust company, based in New York. Annaly pays a dividend of about $2.60 annually which is equivalent to a yield of around 14.8%. This mortgage REIT is one of the best run and a favorite of many top investors.

Here are some key points for NLY:

  • Current share price: $17.96
  • The 52 week range is $14.05 to $18.79.
  • Earnings estimates for 2011: $2.53 per share
  • Earnings estimates for 2012: $2.38 per share
  • Annual dividend: $2.60 per share which yields 14.5%

National Grid Transco (NYSE:NGG) operates an electricity transmission network in England, Scotland, Wales, and the Eastern United States. They also operate a gas national transmission system in Great Britain, and storage facilities for liquefied natural gas amongst other things. This company pays a very generous dividend and can raise prices as inflation rises in the future. This stock may drop on days when European markets are weak, so it makes sense to wait for dips.

Here are some key points for NGG:

  • Current share price: $49.31
  • The 52 week range is $41.17 to $52.18
  • Earnings estimates for 2011: $4.07 per share
  • Earnings estimates for 2012: $4.51 per share
  • Annual dividend: $3.80 per share which yields 7.7%

Vodafone Group PLC (NASDAQ:VOD) provides mobile communications services including voice, data, Internet, etc., and is based in Europe. Since the sovereign debt issues in Europe are likely to remain in the headlines for the next few months, it makes sense to buy this on dips.

Here are some key points for VOD:

  • Current share price: $26.08
  • The 52 week range is $24.74 to $29.75
  • Earnings estimates for 2011: $2.92 per share
  • Earnings estimates for 2012: $3.25 per share
  • Annual dividend: about $1.92 per share which yields 7.5%

HCP, Inc. (NYSE:HCP) is a real estate investment trust that primarily owns health care related properties such as medical offices and senior housing. Just like Cogdell Spencer (CSA), this stock dropped in the market correction, to around $29 per share. However, it has already bounced back, so I would wait for dips in this stock before buying and focus on the shares of Cogdell Spencer as they have more rebound potential in the health care REIT sector and a much higher yield for now.

Here are some key points for HCP:

  • Current share price: $36.54
  • The 52 week range is $28.76 to $40.75
  • Earnings estimates for 2011: $2.54 per share
  • Earnings estimates for 2012: $2.80 per share
  • Annual dividend: $1.92 per share which yields 5.4%

Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.

Source: 7 Undervalued Stocks With Generous Dividends