The same strategies that worked for investors in 2011 should also work well in 2012. The markets are likely to see days of turmoil when concerns over Europe take global markets down. When there are signs of hope, we are likely to see triple-digit rallies fueld by optimism and short covering. Very low interest rates are likely to persist for the next couple of years, as central bankers around the world try to create the conditions for an economic recovery.
With money market accounts and other investments yielding almost nothing, more and more investors are seeking out high-yielding dividend stocks so that their money actually works for them rather than keeping it in low-rate savings accounts that only work to help boost the economy.
Obviously, buying stocks can be risky, so it makes sense to create a diversified portfolio full of companies that can withstand a recession and still pay a stable dividend. The stocks below all offer high yields and create a portfolio that yields almost 11%. Furthermore, these stocks are trading well below their 52-week highs, and could offer capital gains, especially if you patiently wait for dips before buying. Here is a closer look at 6 top-yielding dividend stocks that could perform well in 2012. An equal weighting in these stocks would provide a yield that averages over 10.6%.
BreitBurn Energy Partners (BBEP) develops and produces natural gas and crude oil with projects in Michigan, California, Wyoming, Florida, and others. Stocks like BreitBurn can offer both a high yield and some protection against inflation, because companies in the energy sector generally can raise prices as inflation heats up. This stock has made a sharp move from the $17 range in recent days, so wait for dips before buying.
Here are some key points for BBEP:
- Current share price: $18.98
- The 52 week range is $15 to $23.14
- Earnings estimates for 2011: $2.46 per share
- Earnings estimates for 2012: $1.10 per share
- Annual dividend: $1.74 per share which yields 9.5%
Linn Energy LLC (LINE) is an independent oil and natural gas company and has interests in properties located in Oklahoma, Kansas, Louisiana, Illinois, Michigan, California, Texas and New Mexico. Linn Energy has plans to invest about $880 million on its oil and gas projects during 2012 and this should fuel future growth. This company has a strong history of paying dividends and dips to about $37, look like very attractive buying opportunities.
Here are some key points for LINE:
- Current share price: $38.04
- The 52 week range is $31.03 to $41.13
- Earnings estimates for 2011: $1.81 per share
- Earnings estimates for 2012: $2.21 per share
- Annual dividend: $2.76 per share which yields 7.2%
CYS Investments, Inc. (CYS) is a mortgage real estate investment trust (mREIT) company. CYS is one of the highest-yielding mortgage REIT stocks, and it is also trading near book value, which is $12.98. Recently, the stock has dropped to about the $12.75 and traded up to about the $13.25, so nimble traders might do well by playing these trading ranges.
Here are some key points for CYS:
- Current share price: $13.17
- The 52 week range is $10.52 to $13.78
- Earnings estimates for 2011: n/a on Yahoo Finance
- Earnings estimates for 2012: n/a on Yahoo Finance
- Annual dividend: $2.20 per share which yields 15.1%
Annaly Capital Management, Inc., (NLY) is a mortgage real estate investment trust (mREIT) company, based in New York. Annaly is one of the best-managed mortgage REIT stocks and it is the only mREIT stock that Cramer has called a buy recently. "Bond King" Bill Gross of PIMCO is also bullish on Annaly shares. I would wait for dips below $16.50 before considering a buy.
Here are some key points for NLY:
- Current share price: $16.94
- The 52 week range is $14.05 to $18.79.
- Earnings estimates for 2011: $2.41 per share
- Earnings estimates for 2012: $2.29 per share
- Annual dividend: $2.28 per share which yields 13.5%
France Telecom (FTE) is a major telecommunications company, based in France. This company offers a wide range of services such as Internet, mobile phones, and it operates in France, Spain, Poland and other countries. French stocks are likely to remain under pressure until the European debt crisis is resolved or stabilized. Many investors expect ratings agencies to downgrade France in early 2012, and this could take French stocks lower. One strategy would be to wait for a downgrade and buy this and other French stocks on any major dips.
Here are some key points for FTE:
- Current share price: $15.64
- The 52 week range is $15.13 to $23.70
- Earnings estimates for 2011: $1.91 per share
- Earnings estimates for 2012: $1.79 per share
- Annual dividend: about $1.37 per share which yields 8.9%
Telefonica SA (TEF) provides mobile communications services including voice, data, Internet, etc., and is based in Spain. Sovereign debt issues in Europe are likely to remain in the headlines in 2012, so it makes sense to buy this on dips and average in over time. Many investors might not realize that even though Telefonica is based in Spain, it also derives significant revenues from Latin America. European countries (including Spain) could see a ratings downgrade, which could cause global stock markets to drop significantly. This could be a buying opportunity to be prepared for, but with the stock already yielding almost 10%, it's cheap enough to buy at least some now.
Here are some key points for TEF:
- Current share price: $17.27
- The 52 week range is $16.56 to $27.31
- Earnings estimates for 2011: $2.34 per share
- Earnings estimates for 2012: $2.43 per share
- Annual dividend: $1.69 per share which yields about 9.9%
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.