7 Top-Yielding Dividend Stocks For The Long Term

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Includes: CTL, FTR, OHAI, PBI, RAI, RRD, WIN
by: Hawkinvest
With the Federal Reserve continuing with a very low interest rate policy, it is just about impossible to find a decent rate of return on money these days. Certificates of deposits, money market accounts, and even most bonds pay so little that you might as well have the cash under your mattress.
However, getting paid nothing for your money is not a long-term plan. Consider that if you park your money in a certificate of deposit or other investment yielding 1% for 10 years, you will have only 10% more money after waiting a decade. It's true that you have almost no risk of losing money in terms of principal loss, but chances are the dollars you get back in 10 years will buy far less than they do today. Chances are that the 10% gains you could make over 10 years won't compensate for your loss of buying power. On the other hand, if you invest in certain high yielding stocks you could have considerably more in 10 years. Yes, you have to stomach the volatility, but the market will pay you very well for doing that. If you invest in a stock with a 7% yield you could have about 70% more money in 10 years. This could be even better if you reinvest your dividends or if the share price rises, or if the dividend is increased by the company over time. When you factor in those variables, you might be looking at gains of about 100%, which is 10 times as much if you take the "safe" route of parking your money in a certificate of deposit. Here are some top-yielding stocks that could earn 10 times as much or more than low rates available elsewhere:
R.R. Donnelley & Sons (NASDAQ:RRD) is a leading commercial printer of products like catalogs, magazines, forms and labels. This stock was trading around $19 per share in early August, but have since plummeted about 20% just in the last few weeks. It looks like an exceptional value on any dips now because it yields over 7%.
Here are some key points for RRD:
Current share price: $14.94
The 52 week range is $12.90 to $21.34
Earnings estimates for 2011: $1.89 per share
Earnings estimates for 2012: $2.08 per share
Annual dividend: $1.04 per share which yields 7.2%

NGP Capital Resources Company, Inc. (NGPC) is a company that specializes in the oil and gas industry by making diversified investments through secured, senior, subordinate debt, convertible debt and equity in promising companies. NGPC returns some of the investment gains to shareholders with one of the highest dividend payouts in the sector-now yielding about 12%. NGPC is trading below book value which is $9.63. In July and August, this stock regularly traded around $7.50 to even over $9 and a rebound to those levels is likely when markets calm down. NGPC is a great way to have exposure to the oil sector and get paid huge dividends, plus there is a strong chance these oversold shares will rebound.

Here are some key points for NGPC:
Current share price: $6.31
The 52 week range is $5.75 to $10.89
Earnings estimates for 2011: 76 cents per share
Earnings estimates for 2012: 89 cents per share
Annual dividend: 72 cents per share which yields about 12%

CenturyLink, Inc. (NYSE:CTL) provides communications services, such as local and long distance, Internet access, data services and video services. This is one of the top yielding stocks in the S&P 500 Index. For some reason, earnings estimates have dropped considerably in the past few weeks and that concerns me, so I would wait to see where it bottoms out.

Here are some key points for CTL:
Current share price: $33.54
The 52 week range is $31.16 to $46.87
Earnings estimates for 2011: $1.61 per share
Earnings estimates for 2012: $1.77 per share
Annual dividend: $2.90 per share which yields 9%

Windstream Corporation (NASDAQ:WIN) provides communications services (primarily to rural areas), such as local and long distance, Internet access, data services and video services. This is also one of the top yielding stocks in the market and has recently dipped, which has created a solid buying opportunity.

Here are some key points for WIN:
Current share price: $11.42
The 52 week range is $10.97 to $14.40.
Earnings estimates for 2011: 79 cents per share
Earnings estimates for 2012: 85 cents per share
Annual dividend: $1 per share which yields 8.8%

Reynolds American (NYSE:RAI) is a maker of tobacco products including cigarettes well known brand names such as Camel, Pall Mall, Winston, Kool, Doral, Salem, etc. The dividend is strong and completely covered by earnings. This stock has moved higher in the last few trading sessions, so I would wait for the shares to drop before buying.

Here are some key points for RAI:
Current share price: $39.61
The 52 week range is $27.14 to $39.87
Earnings estimates for 2011: $2.65 per share
Earnings estimates for 2012: $2.84 per share
Annual dividend: $2.12 per share which yields 5.5%

Pitney Bowes, Inc. (NYSE:PBI) offers mail processing equipment and provides equipment, supplies, software, services and solutions for mailing. This stock has dropped with the markets and now trades at bargain levels, near the 52-week low. Some are concerned that the demand for this company's products and services will be diminished as email continues to grow, but chances are there is enough demand for both mail and email to prosper.

Here are some key points for PBI:
Current share price: $20.09
The 52 week range is $17.95 to $26.36
Earnings estimates for 2011: $2.28 per share
Earnings estimates for 2012: $2.30 per share
Annual dividend: $1.48 per share which yields 7.4%

Frontier Communications (NYSE:FTR) provides communications services, such as local and long distance, Internet access, data services and video services. It appears the dividend at FTR could be at risk since it is not covered by earnings estimates in 2011 or 2012. Until it bottoms out, I would avoid this stock as a long term investment, but I would consider it as a trade and buy it on dips and sell on rallies.

Here are some key points for FTR:
Current share price: $6.04
The 52 week range is $5.33 to $9.84
Earnings estimates for 2011: 25 cents
Earnings estimates for 2012: 30 cents
Annual dividend: 75 cents per share which yields 12.7%

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.

Disclosure: I am long NGPC.