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.
With the Federal Reserve continuing 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 good long term plan. Consider that if you park your money in a certificate of deposit or other investment yielding 1% for ten years, you will have only 10% more money after waiting a decade. On the other hand, if you invest in certain high yielding stocks you could have considerably more in about five years.
A portfolio with an equal weighting in the 5 stocks below will yield about 13%. If you invest in stocks with an average yield of 13%, your portfolio will double in value in just over five years. If you adjust the portfolio to hold more of the higher dividend stocks, you can increase the yield and shorten the time to double your portfolio. To make calculations for individual stocks you can use the investment calculator here.
Here is a portfolio of top-yielding stocks that could double your money in just over 5 years:
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: $6.10
- 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%
Calumet Specialty Products Partners (NASDAQ:CLMT) processes and sells fuels and specialty products such as asphalt. This company has been in business since 1916. This stock was trading around $20 just a few weeks ago and it now offers a very strong dividend yield of nearly 11%, plus a chance for capital gains if the stock rebounds back to former levels.
Here are some key points for CLMT:
- Current share price: $18.67
- The 52 week range is $15.99 to $24.95
- Earnings estimates for 2011: 73 cents per share
- Earnings estimates for 2012: $1.74 per share
- Annual dividend: $2 per share which yields 10.7%
Energy Transfer Partners (NYSE:ETP) provides natural gas pipeline and transportation services, and sells propane in the United States. This stock offers a strong dividend payout and yields almost 8%. The shares look attractive now for both the dividend and potential share price appreciation. However, this stock has rebounded recently so I would wait for dips and that will give you a higher yield.
Here are some key points for ETP:
- Current share price: $45.85
- The 52 week range is $38.08 to $55.50
- Earnings estimates for 2011: $1.92 per share
- Earnings estimates for 2012: $2.50 per share
- Annual dividend: $3.58 per share which yields 7.8%
Invesco Mortgage Capital (NYSE:IVR) is a mortgage real estate investment trust (REIT) company, based in Georgia. This is one of the highest yielding mREIT stocks and it is also trading at a very large discount to book value. The stock yields about 21% and the book value is about $19.32. This stock appears extremely undervalued.
Here are some key points for IVR:
- Current share price: $15.38
- The 52 week range is $12.55 to $24.07
- Earnings estimates for 2011: $3.74 per share
- Earnings estimates for 2012: $3.55 per share
- Annual dividend: $3.20 per share which yields 21%
Capstead Mortgage Corporation (NYSE:CMO) is a real estate investment trust (REIT) that invests in residential mortgage-backed securities. The book value is $12.54. With a dividend yielding over 14%, and a share price below book value, this looks like a great buying opportunity.
Here are some key points for CMO:
- Current share price: $12.28
- The 52 week range is $10 to $13.95
- Earnings estimates for 2011: $1.79 per share
- Earnings estimates for 2012: $1.67 per share
- Annual dividend: $1.76 per share which yields 14.3%
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 have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.