Diversified Dividend Portfolio Yielding Nearly 12%

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Includes: CIM, CSA, JNK, NLY, PDLI, TEF, VEOEY
by: Hawkinvest
Dividend stocks have been one of the best investments over the last several years and they have also performed well in the recent market correction 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.
Diversification has also been extremely important and it has helped some investors reduce risk and allowed them to sleep at night. When you are getting paid solid dividends and if you are well diversified, chances are much better that you will be able to ride out a market correction without making emotional decisions like panic selling. The stocks below give investors a chance to lock in very high yields (a portfolio average of nearly 12%), some diversification and the possibility for substantial capital gains as well:

Cogdell Spencer, Inc. (NYSE:CSA) is a real estate investment trust that primarily owns healthcare related properties such as medical offices. Like most stocks, this one has dropped with 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 healthcare properties, the revenues and dividend are likely to be more stable. This stock is very oversold, and also has a generous dividend.

Here are some key points for CSA:
  • Current share price: $3.67
  • The 52 week range is $3.18 to $7.02
  • Earnings estimates for 2011: about 30 cents per share
  • Earnings estimates for 2012: about 41 cents per share
  • Annual dividend: 40 cents per share which yields about 11%
SPDR Barclays Capital High Yield Bond (NYSEARCA:JNK) is an exchange traded fund (ETF) that invests primarily in high yield bonds, which some investors call junk bonds. These bonds pay a higher rate of interest over other corporate bonds because they do not have an investment grade rating. This sector has been dropping due to recession concerns but it looks like a good place to invest once the market hits bottom.
Here are some key points for JNK:
  • Current share price: $37.43
  • The 52 week range is $34.09 to $41.32
  • Earnings estimates for 2011: n/a
  • Earnings estimates for 2012: n/a
  • Annual dividend: about 24 cents per month, per share which yields about 9%
Chimera Investment Corporation (NYSE:CIM) is a real estate investment trust (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: $2.79
  • The 52 week range is $2.38 to $4.36
  • Earnings estimates for 2011: 56 cents per share
  • Earnings estimates for 2012: 50 cents per share
  • Annual dividend: 52 cents per share which yields 18.4%
Annaly Capital Management, Inc., (NYSE:NLY) is a mortgage real estate investment trust (REIT) 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: $15.79
  • The 52 week range is $14.05 to $18.79.
  • Earnings estimates for 2011: $2.61 per share
  • Earnings estimates for 2012: $2.53 per share
  • Annual dividend: $2.60 per share which yields 14.3%
Telefonica SA (NYSE:TEF) provides mobile communications services including voice, data, Internet, etc., and is based in Spain. 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. Spain has plenty of economic challenges, but Telefonica also derives significant revenues from Latin America which could be a high growth area for this company in the long run.

Here are some key points for TEF:
  • Current share price: $21.05
  • The 52 week range is $17.31 to $27.61
  • Earnings estimates for 2011: $2.34 per share
  • Earnings estimates for 2012: $2.43 per share
  • Annual dividend: $1.72 per share which yields about 8.4%
Veolia Environnement (VE) is based in France and is a leading provider of water, recycling, environmental services, waste collection and processing etc., with operations worldwide. Veolia stock has been hit very hard over the crisis in Europe, and now offers a very rich yield of about 10%. Many of the services Veolia provides are basic necessities and are less likely to be severely impacted by a downturn in Europe.

Here are some key points for VE:
  • Current share price: $15.46
  • The 52 week range is $13.02 to $33.86
  • Earnings estimates for 2011: $1.38 per share
  • Earnings estimates for 2012: $1.46 per share
  • Annual dividend: $1.47 per share which yields about 9.9%
PDLI BioPharma, Inc. (NASDAQ:PDLI) owns and manages patents that are licensed by biotech and pharmaceutical companies. This company receives revenues from the licensing agreements and uses some of that money to pay a very generous dividend to shareholders. The earnings estimates easily cover the dividend payout so it is possible that the dividend could rise in the future.
Here are some key points for PDLI:
  • Current share price: $5.37
  • The 52 week range is $4.66 to $6.70
  • Earnings estimates for 2011: $1.14 per share
  • Earnings estimates for 2012: $1.33 per share
  • Annual dividend: 60 cents per share which yields 10.9%
Disclosure: I am long CIM.
Disclaimer: 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.