In order to see substantial gains in the market, one must do substantial research in order to find stocks that are being sold at a true "value." A momentarily bad quarter and shifting market sentiment has pushed the market low, on some stocks more than on others.
I have compiled the data for 4 companies in different sectors that are "must haves" for value investors who are seeking long term growth. These positions pay substantial dividends, and I believe they are great additions to any good portfolio. Another reason why I like dividend investing is because it provides a steady stream of income to live off, whether it is monthly or quarterly. Below are 4 stocks that pay dividends and are excellent companies to consider for a steady stream of income and steady growth:
1.) Pengrowth Energy Corporation (NYSE:PGH) engages in the acquisition, exploration, development, and production of oil and natural gas reserves in the Western Canadian Sedimentary Basin. The current market price is $10.15 with a one-year analyst price target of $12.75 (25.62% upside potential). Not only is the upside potential outstanding, but this position pays a dividend yield of 8.44%! I like the fact that dividends are paid monthly, this way you always have a steady stream of income coming in. The stock is down heavily from pre-2009 levels, but performs better. PGH has an EPS of 0.52 with a P/E of 19.38 compared to the industry average of 14.18. This is an outstanding income stock.
2.) MFA Financial Inc. (NYSE:MFA) is engaged in the business of investing, on a leveraged basis, in residential Agency and Non-Agency mortgage-backed securities (MBS). It generates net income for distribution to its stockholders resulting from the difference between the interest and other income it earns on its investments and the interest expense it pays on the borrowings, which it uses to finance its leveraged investments and its operating costs. MFA is currently trading at $6.74 with a one-year analyst price target of $7.98. This represents an 18.4% upside potential, and the book value of $7.75 indicates the stock is currently 15% undervalued. Dividend yield is an unbelievable 14.84%. Not only is the dividend yield exceptional, so are the company’s fundamentals; ROA is 2.92% and ROE is 12.08%, EPS is .96 and P/E is 7.03x. MFA is great for those "less risky" investors who are looking for superior returns; Beta is .08 with a volatility average of 23.62. The company's gross margin has been higher than its subsector average for each of the past five years, not to mention it is a "budget" stock at a price like $6.74.
3.) Sabine Royalty Trust (NYSE:SBR) was founded in 1982, it receives a distribution of royalty and mineral interests from Sabine Corporation. Its royalty and mineral interests include landowner's royalties, overriding royalty interests, minerals, production payments, and other non-participatory interests in various producing and proved undeveloped oil and gas properties in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. The current market price is $65.83, and it has a dividend yield of 6%. I also like the strong returns that SBR has brought investors over the past 5 years, which amounts to over 15% total annualized rate-of-return (disregarding dividends). The last dividend payments have been 7/13/2011: $0.41, 8/11/2011: $0.40, 9/13/2011: $0.39, and 10/13/2011: $0.35 respectively. This position has nearly doubled in the last three years, and the trend does not seem to be slowing down. With the kind of dividend yield it has, right now is the time to buy.
4.) Enerplus Corporation (NYSE:ERF) operates as an independent oil and gas producer. The company's property interests are located in western Canada in the provinces of Alberta, British Columbia, Saskatchewan, and Manitoba, as well as in Montana, North Dakota, Pennsylvania, Maryland, and Delaware in the United States. Enerplus operates a land base of approximately 420,000 net acres. The current market price is $27.08 with a one-year analyst price target of $30.21. This represents an 11.56% upside potential. The one-year upside potential, however, does not include yield from dividends that add up to 7.72% yearly. With oil-and-gas investments, you’re exposed to fluctuating commodity prices, but ERF does its best to mitigate that risk by maintaining one of the strongest balance sheets of its competitors. In addition, Enerplus carries on an active exploration and acquisition program to replace the oil and gas it pumps out of the ground, which makes this company a safe bet with a steady stream of income and no sign of the company going anywhere.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.