Is it time to flee to safety? With the economic and political climates only becoming more tumultuous, I have been paying closer attention to dividend stocks recently. We all know about the blue chip dividend companies like AT&T (T), but there are attractive companies with high yields that are going ex-dividend every week.
To focus on these opportunities, I ran a screen with a focus on relative safety for the investments. Since this is a high-yield quest I began with a specification of a dividend yield greater than four percent, and an ex-dividend date within the next week.
To provide a layer of safety, I narrowed down the environment by looking at companies with market capitalizations greater than $1 billion, PEs between zero and twenty, and institutional holding percentage of at least twenty-five percent. While not a precise requirement, I prefer companies that have underperformed the S&P 500 year-to-date, as it indicates limited downside relative to peers. These criteria are summarized below:
- Dividend Yield ≥ 4.0%
- Ex-Dividend Date = Next Week
- Market Capitalization ≥ $1B
- PE Ratio: 0-20
- Institutional Ownership ≥ 25%
After applying this screen, I arrived at seven potential trades. Although I envision these as short-term trading ideas, you still need to be careful. The information presented below should simply be a starting point for further research.
New York Community Bankcorp, Inc. (NYB): 7.41% Yield, Ex-Dividend 11/3
NYB primarily engages in generating deposits and originating loans, yet it is currently lagging the S&P by nearly thirty percent. I suspect that it is being punished just like other financials, despite having a very sleepy business model compared to underwriting, trading, and the like. Essentially, this is a bank in the traditional sense of the word, and offers a robust dividend to compensate patient investors.
AllianceBernstein Holding LP (AB): 10.09% Yield, Ex-Dividend 11/3
AllianceBernstein is an investment management company with a heavy emphasis on research. While this is not the ultra-safe retail banking that NYB engages in, this is a relatively lower-risk business, which is really what you are looking for in this screen. This appears to be the case of another financial company being oversold, just like NYB discussed above. The S&P has risen over forty percent compared to AB, so the downside appears to be limited. As a limited partnership, there are special tax implications for this investment that also need to be considered on an individual basis.
Sunoco Logistics Partners L.P. (SXL): 5.1% Yield, Ex-Dividend 11/4
Sunoco Logistics is involved in the business of refined products and crude oil, specifically transporting, storing, purchasing, and selling. The stock has surged nearly fifteen percent in the last month as the price of crude has climbed; therefore, this might not be the most attractive ex-dividend trade, but if you are bullish on near-term prospects, the concerns can be mitigated.
Seagate Technology PLC (STX): 4.41% Yield, Ex-Dividend 11/1
Seagate is one of the leading computer hard disk drive manufacturer -- where you store your files, pictures, and music on your computer. Technology companies are generally not the highest dividend payers, but the hard disk drive business is relatively mature for the tech industry, so there are more opportunities to return proceeds to investors. Hard disk drives may be losing popularity in the face of solid-state drives, but until solid state becomes more cost-effective, Seagate will be able to print money with its legacy hardware.
The Southern Company (SO): 4.34% Yield, Ex-Dividend 11/3
The Southern Company is a regulated utility company that produces and distributes energy for over four million customers in the Southern United States. As I stated last week about Pinnacle West Capital Corporation (PNW), “while slight geographical differences exist for regional utilities, the underlying business is essentially the same: a stable, cash-cow business that returns most profits to investors via dividends. I have successfully owned utility companies in the northeast US.”
The information presented above has been summarized below:
Disclosure: I am long T.