We have been urging investors to focus on high dividend stocks for the past year. Dividend stocks perform much better than the market during turbulent times. The problem is, most people can’t time the market. Luckily, investing in high dividend stocks beat the market on the average as well. Another good thing about high dividend stocks is their lower risk profile. This is especially true when investors form a diversified portfolio of high dividend stocks. In this article, we will focus on five large cap stocks with low forward P/E ratios, dividend yields over 10% and an analyst recommendation of buy or better:
1. France Telecom (FTE) provides data, fixed line and mobile phone services to France, Spain, Portugal, the UK and internationally. It has a $46.28B market cap and a forward P/E ratio of just 8.56. FTE offers a dividend yield of 11.11% and has a beta of 0.86. Its biggest competitor is Vodafone (VOD). VOD is much bigger, with a market cap of $144B, but FTE has greater relative revenue, earning $63.46B (almost $20B more than its market cap) while VOD’s revenue is just over half its market cap at $73.58B. FTE also has a lower P/E ratio than VOD’s 11.54. FTE recently traded at $17.47. Analysts expect the stock to hit $21 within the next 12 months. Steve Cohen’s SAC Capital Advisors is a fan.
2. Annaly Capital Management (NLY) is a real estate investment trust based in New York. It has a $15.85B market cap and a forward P/E ratio of 6.52. The company offers a 14.67% dividend yield and has an ultra low beta of just 0.30. One of NLY’s competitors is Host Hotels & Resorts (HST). In comparison, HST pays a 1.10% dividend yield and is actually estimated to go down in value over the next 12 months. Analysts predict the stock will go from its current $14.54 to $13.84 within the next 12 months. NLY is currently trading at $16.36 a share, and is expected to hit $18.10 in the next year. Bill Miller’s Legg Mason Capital Management had more than $66 million in the company at the end of June.
3. Banco Santander SA (STD) is a bank operating primarily in Spain, the UK, parts of Europe, Brazil and parts of Latin America. It has a $67.69B market cap and a forward P/E of just 4.95. It offers a 10.78% dividend yield and has a 1.73 beta. Its closest competitor is Banco Bilbao Vizcaya Argentina (BBVA). In comparison, BBVA has negative quarterly growth (-4.50% vs STD’s 7.60%) and less net income ($5.74B vs STD’s $10.27B). STD recently traded at $8.02. It is estimated to rise to $10 within a year. Ken Fisher’s Fisher Asset Management has more than $334 million in STD.
4. Telefonica SA (TEF) is a fixed and mobile telephony company serving Spain, the rest of Europe and Latin America. TEF has an $89.96B market cap and a forward P/E of 8.18. It has a 10.82% dividend yield and a beta of 1.03. Its closest competitor is America Movil SAB de CV (AMX). In comparison, AMX has the larger market cap at $98.81B but TEF has greater revenues ($88.4B to AMX’s $48.1B) and a lower P/E ratio than AMX’s 14.17. TEF recently traded at $19.71 a share. Analysts predict the stock will reach $24.80 a share within the next 12 months. Jim Simons’ Renaissance Technologies likes TEF.
5. YPF SA (YPF) is an energy company based in Argentina. It is involved in the production and exploration of crude oil, natural gas and liquified petroleum gas (LPG). YPF has a $12.39B market cap and a forward P/E of 8.03. It pays a 10.10% dividend yield and has a beta of 0.79. Its closest competitor is Petrobas Argentina SA (PZE). PZE is smaller (its market cap is just $1.37B) and it pays a much lower dividend yield at 3.27%. YPF is trading at $31.49 but analysts expect the stock will reach $50.89 a share within the next year. Eric Mindich’s Eton Park Capital had 4.63% of its portfolio in YPF at the end of the second quarter. Its position was valued at over $440 million.
Disclosure: I am long VOD.