By Michael Williams
It's the Golden Rule of investment: Buy low, sell high. No matter whether it is gold, pork bellies or blue chip stocks; this is the way to make money. Knowing what needs to be done and then doing it can be very different stories, however, and many investors need some direction. With that in mind, five dividend stocks to get while they are cheap: Ford Motor Co (F), Avon Products Inc (AVP), Cloud Peak Energy Inc (CLD), Activision Blizzard Inc (ATVI) and Bank of America Corp. (BAC) Shares in these companies have been serving up yields as their stock prices climb.
Ford Motor Co.: Regarded as one of the top blue chip stocks for decades, Ford has emerged from the recent economic crisis with something to prove. Known for competing with Toyota Motor Corp (TM) and General Motors, (GM) the automotive giant has once again become a powerful, profitable company. Racing out to an impressive year-to-year quarterly revenue growth of 10.60%, the company is outpacing both GM at 7.8% and Toyota's -4.8%.
Reveling in the designation as America's top car brand, many believe Ford can maintain its momentum in 2012. Ford's stock sits at $12.12 per share, hovering below the midpoint of its 52-week range. The company has recorded a dividend of 0.20 and yield or 1.7%. With a 1-year target of $15.69 and a 5-year PEG ratio of 0.82, Ford is an especially good value at this time.
Avon Products Inc.: Avon was founded in 1886, and the company is one of the best-known personal-care products distributors ever in the United States. The company has recently had some shakeups in its management chain, but it still does one thing very well: Avon generates nice dividends at affordable share prices, which is something we've highlighted for this name in the past. Currently selling well below its 200-day moving at 17.89, the stock paid a dividend of 0.92 with a yield of 5.10%.
Not only is it cranking out a nice dividend, but Avon is on its way up in share price. Riding a year-to-year return on equity of 43.96% and a forward P/E of 10.16, its one-year target estimate is 22.33, or an increase of almost 30%. With nice dividends and very strong growth potential, purchasing Avon stock is one way to give any portfolio a profitable makeover.
Cloud Peak Energy Inc.: Another return-on-equity giant, Cloud Peak Energy is still an outstanding energy stock to consider. Considered by some analysts to be a takeover target, CLD just keeps performing. With a share price of around $20, this mid cap company generated annual earnings per share of $2.80 and a P/E of 8.34, making it a prime candidate to purchase while its price is still reasonable.
Investors looking to move on Cloud Peak probably won't want to wait too long if they expect to get the best price. In spite of dwindling North American demand for coal, the company has continued to bolster its production by exporting to China. This has resulted in a steady year-to-year quarterly revenue gain of 9.30% and an expected 40% gain on its share price. With a forward P/E of 9.14, that trend is likely to continue, meaning that now is the time to consider taking a position in the company.
Activision Blizzard Inc.: Few markets are more competitive than the interactive gaming market, and Activision Blizzard Inc is one of the top names in manufacturing. Competing against rivals such as Electronic Arts Inc (ERTS) and Sony Corp, (SNE) the company produces well-known games like "Generator Rex," "NASCAR: The Game," "Spider-Man" and the "Call of Duty" series. The company has a market cap of 14.37 billion, a share price of 12.61 and a dividend of 0.17, creating a 1.3% yield.
After dipping to its 52-week low in August 2011, the company's release of the highly-anticipated "Call of Duty: Modern Warfare 3" game. One of the biggest releases of all-time, the company's stock soared more than 30%. Although the share price backed off about 10%, the future of the company looks very bright. Its one-year estimated target of 15.71 would push well past its 52-week high. The company looks strong, with a forward P/E of 13.02 and a year-to-year quarterly earnings that has surged 190%. Sporting a 5-year PEG ratio of 1.12, many analysts believe that Activision will continue to be a solid performer. With one of the hottest selections of titles in the gaming industry, Activision looks like a great option that should continue to improve.
Bank of America Corp.: The rest of the list is filled with performing stocks that have been overlooked by many investors; the same can't be said for Bank of America. While competitors like Wells Fargo (WFC) and Citigroup (C) have recovered nicely from the global financial crisis, Bank of America has struggled. This large, 62.8 billion market cap company has struggled to re-engage, and its decision to implement a $5 fee on debit card purchases brought the wrath of the Occupy Wall Street crowd. Add in the fact that Bank of America performance has been lowered to "underperform" and one might think that BAC is off-limits, investment-wise.
The company still has problems, but some analysts still see a lot of promise. A year-to-year quarterly revenue growth of 17.60% is a very good place to start. The company paid a dividend of 0.04 for a yield of 0.60%. Add in a forward P/E of 7.63 and a PEG ratio of 4.03, and things look even better. Finally, the one-year target estimate is 9.02, an increase of nearly 33% on its current price of 6.79. Investors should be careful, but Bank of America has the potential to be one of the surprise stocks of 2012.
The Art of Buying Low and Selling High
The purpose of investing in the stock market is to make money, which means buying low-priced stock and selling when its value rises. Ford Motor Co, Avon Products Inc, Cloud Peak Energy Inc, Activision Blizzard Inc and Bank of America Corp are all solid dividend stocks with the potential to earn dividends while their share prices rise. Getting the best return possible means that investors should buy them while they are still cheap.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.