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The markets are rather overbought, and long term dividend investors would be best served by waiting for a pullback (a strong one) before committing large sums to this market. Our two favorite plays on this list are Senior Housing Properties Trust (NYSE:SNH) and Southern Copper Corp (NYSE:SCCO). SCCO has a strong quarterly revenue growth rate of 38%, an impressive quarterly earnings growth rate of 81% and a very impressive five-year dividend growth rate of 53%.

SNH has a strong quarterly revenue growth rate of 39.9%, a five divided average of 7.2%, has been paying dividends since 1999 and has increased dividends consecutively for 10 years. Net income has also been increasing for the past three years.

Investors should pay attention to the following metrics as it could prove to be very useful in the selection process.

Enterprise value is a combination of the market cap, debt, minority interests, preferred shares less total cash and cash equivalents. This provides a better picture because it is a more accurate representation of a company's value contrary to simply looking at the Market cap.

Levered free cash flow is the amount of cash available to stock holders after interest payments on debt are made. A company with a small amount of debt will only have to spend a modest amount of money on interest payments, which in turn means that there is more money to send to shareholders in the form of dividends and vice versa. Individuals searching more ideas might find this article to be of interest 7 Stocks That Sport Lofty Yields As High As 20%

Operating cash flow is generally a better metric than earnings per share because a company can show positive net earnings and still not be able to properly service its debt; the cash flow is what pays the bills.

The payout ratio tells us what portion of the profit is being returned to investors. A pay out ratio over 100% indicates that the company is paying out more money to shareholders, then they are making; this situation cannot last forever. In general, if the company has a high operating cash flow and access to capital markets, they can keep this going on for a while. As companies usually only pay the portion of the debt that is coming due and not the whole debt, this technique/trick can technically be employed to maintain the dividend for sometime. If the payout ratio continues to increase, the situation warrants close monitoring as this cannot last forever; if your tolerance for risk is a low, look for similar companies with the same or higher yields, but with lower payout ratios

Turnover Ratio lets you know the number of times a company's inventory is replaced in a given time period. It is calculated by dividing the cost of goods sold by average inventory during the time period studied. A high turn over ratio indicates that a company is producing and selling its good and services very quickly.

Debt to Equity Ratio is found by dividing the company's total amount of long-term debt (debts with interest rates that have a maturity longer than one year) by the total amount of equity. A debt to equity ratio of 0.5 tells us that the company is using 50 cents of liabilities in addition to each $1 dollar of shareholders equity in the business. There is no fixed ideal number as it depends on the industry the company is in. However, in general a ratio under 1 is acceptable and ideally it should be in the 0.5-0.6 ranges.

Important facts investors should be aware in regards to investing and REITS

  1. Payout ratios are not that important when it comes to REITS as they are required by law to pay a majority of their cash flow as dividends. Payout ratios are calculated by dividing the dividend rate by the net income per share, and this is why the payout ratio for REITS is often higher than 100%. The more important ratio to focus on is the cash flow per share. If one focuses on the cash flow, one will see that in most cases, it exceeds the dividend declared per share.

Two other notable plays are Southern Copper Corp and Golar LNG Limited (NASDAQ:GLNG) with yields of 8.4% and 2.9%, respectively.

SCCO has an enterprise value of $30.8 billion, a quarterly revenue growth rate of 38%, an impressive quarterly earnings growth rate of 81% a ROE of 57.3%, a very impressive five-year dividend growth rate of 53%, a total three-year return of 148%, and has been paying dividends since 1996. It has a strong levered free cash flow rate of $1.53 billion. The dividend was increased from $0.60 to $0.70, and so far it has consecutively increased its dividend for two years.

Net income for the past three years is as follows: In 2008, it came in at $1.4 billion, in 2009 it dropped to $929 million and in 2010; it surged to $1.54 billion. For 2011, it stands at $1.8 billion. SCCO has a payout ratio of 81 and sports a high beta of 1.59, making it another good candidate for covered writes.

GLNG has a yield of 2.9%. an enterprise value of $4.33 billion, a quarterly revenue growth rate of 10.4%, a very strong quarterly earnings growth rate of 232% , a ROE of 9.46%, a five-year dividend growth rate of 92%, a five dividend average of 7.2%, has total 3 year return of 500% and has been paying dividends since 2007. It has an operating cash flow of $161 million and revenues of $283 million. It recently announced a special dividend of $0.30 which was 3 cents higher than the last payment of 27 cents.

  1. Price to sales 15.58
  2. Price to tangible book 6.40
  3. Price to cash flow 58.80
  4. Price to free cash flow 23.30
  5. 5 year sales growth 4.35

Stock

Dividend Yield

Market Cap

Forward PE

EBITDA

Quarterly Revenue Growth

Beta

Revenue

Operating Cash flow

VNR

8.10%

873.19M

16.03

222.94M

228.10%

0.45

249.99M

149.68M

EXC

5.30%

26.14B

12.97

6.66B

0.10%

0.5

19.43B

4.05B

SNH

6.80%

3.61B

11.92

336.95M

39.90%

1.03

409.07M

225.86M

OZM

11.40%

955.41M

7.97

558.64M

22.00%

1.71

1.00B

395.73M

VOD

7.80%

139.23B

9.69

22.55B

4.10%

0.67

71.67B

17.89B

Vanguard Natural Resource LLC (NYSE: VNR)

Industry: Production & Extraction

It has a levered free cash flow rate of -$66.2 and a current ratio of 0.14.

Net income for the past three years

  1. 2008= -$3.7million
  2. 2009=- $95.7 million
  3. 2010= $21.8.9 million
  4. 2011= it stands at $107 million.

Total cash flow from operating activities

  1. 2008= $39.5 million
  2. 2009 =$52.1 million
  3. 2010 = $71.5 million
  4. 2011= It stands at $84.2 million

Key Ratios

• Price to sale 5.4

• Price to tangible book 0

• Price to cash flow 8.3

• Price to free cash flow N.A.

• 5 year sales growth N.A.

• Inventory turnover 0

• Asset turnover 0

• ROE 23.41%

• Return on assets 9.32%

• 200 day moving average 27.65

• Total debt 749.50M

• Book value 11.58

• Qtrly Earnings Growth -----

• Dividend yield 5 year Average 0.00%

• Dividend rate $ 2.35

• Payout ratio 103.00%

• Dividend growth rate 3 year average 10.88%

• Dividend growth rate 5 year average 0.00%

• Consecutive dividend increases 3 years

• Paying dividends since 2008

• Total return last 3 years 325.12%

• Total return last 5 years N/A %

Exelon Corp. (NYSE: EXC)

Industry: Electric Utilities

It has a levered free cash flow rate of -$387 million and a current ratio of 1.26.

Net income for the past three years

  1. 2008= $2.73 billion
  2. 2009= $2.7 billion
  3. 2010= $2.56 billion
  4. 2011= it stands at $1.9 billion and could top the $2.55 billion mark

Total cash flow from operating activities

  1. 2008= $6.55 billion
  2. 2009 =$6.09 billion
  3. 2010 = $5.24 billion
  4. 2011= It stands at $2.94 billion and could top the $4.8 billion mark

Key Ratios

• Price to sale 5.5

• Price to tangible book 0

• Price to cash flow 5.3

• Price to free cash flow 3.6

• 5 year sales growth 0.59

• Inventory turnover 0

• Asset turnover 0

• ROE 17.05%

• Return on assets 5.32%

• 200 day moving average 42.84

• Total debt 14.58B

• Book value 21.65

• Qtrly Earnings Growth -28.90%

• Dividend yield 5 year Average 4.10%

• Dividend rate $ 2.10

• Payout ratio 57.00%

• Dividend growth rate 3 year average 1.23%

• Dividend growth rate 5 year average 5.75%

• Consecutive dividend increases 0 years

• Paying dividends since 1902

• Total return last 3 years -16.33%

• Total return last 5 years -17.07%

Senior Housing Properties Trus (NYSE: SNH)

Industry: REITs

It has a levered free cash flow rate of $150.1 million and a current ratio of 044.

Net income for the past three years

  1. 2008= $106.5million
  2. 2009=-$109.7 million
  3. 2010= $116.4 million
  4. 2011= it stands at $84.73 million and it could potentially top the $124 million mark.

Total cash flow from operating activities

  1. 2008= $184.4 million
  2. 2009 =$209.3 million
  3. 2010 = $215.3 million
  4. 2011= It stands at $177.2 million and could potentially top the $217 million mark.

Key Ratios

• Price to sale 24.3

• Price to tangible book 0

• Price to cash flow 6.9

• Price to free cash flow 6.5

• 5 year sales growth N.A.

• Inventory turnover 0

• Asset turnover 0

• ROE 7.05%

• Return on assets 4.14%

• 200 day moving average 22.28

• Total debt 1.60B

• Book value 15.05

• Qtrly Earnings Growth 6.80%

• Dividend yield 5 year Average 7.20%

• Dividend rate $ 1.52

• Payout ratio 144.00%

• Dividend growth rate 3 year average 2.33%

• Dividend growth rate 5 year average 2.60%

• Consecutive dividend increases 10 years

• Paying dividends since 1999

• Total return last 3 years 61.40%

• Total return last 5 years 13.84%

Och-Ziff Capital Management Gr (NYSE: OZM)

Industry: Wealth Management

It has a levered free cash flow rate of $490 million and a current ratio of 1.85.

Net income for the past three years

  1. 2008= -$510million
  2. 2009=- $1.375 billion
  3. 2010= -$1.19 billion
  4. 2011= it stands at -$1.08 billion and could top the -$1.38 billion mark.

Total cash flow from operating activities

  1. 2008= $733.8 million
  2. 2009 =$256.4 million
  3. 2010 = $543.6 million
  4. 2011= It stands at $361 million.

Potential warnings

Dividend dropped from 14 cents to 9 cents. Net income has been negative for 3 years in a row and 2011 could mark the 4th year that net income is negative.

Key Ratios

• Price to sale -11.5

• Price to tangible book 0

• Price to cash flow 3.8

• Price to free cash flow N.A.

• 5 year sales growth N.A.

• Inventory turnover 0

• Asset turnover 0

• ROE ----

• Return on assets 19.27%

• 200 day moving average 10.12

• Total debt 721.08M

• Book value -4.03

• Qtrly Earnings Growth N/A

• Dividend yield 5 year Average 0.00%

• Dividend rate $ 1.07

• Payout ratio 0.00%

• Dividend growth rate 3 year average ----

• Dividend growth rate 5 year average 0.00%

• Consecutive dividend increases 2 years

• Paying dividends since 2008

• Total return last 3 years 137.32%

• Total return last 5 years N/A %

Vodafone Group Plc (NASDAQ: VOD)

Industry: Services

It has a levered free cash flow rate of -$4.2 billion and a current ratio of 0.99.

Net income for the past three years

  1. 2008=$4.4 billion
  2. 2009= $13.07 billion
  3. 2010= $12.6 billion

2011= it stands at $107 million.

Total cash flow from operating activities

  1. 2008= $17.5 billion
  2. 2009 =$19.8 billion
  3. 2010 = $19.22 billion

Key Ratios

• Price to sale 5.3

• Price to tangible book 0

• Price to cash flow 3.6

• Price to free cash flow N.A.

• 5 year sales growth 16.63

• Inventory turnover 0

• Asset turnover 0

• ROE 7.97%

• Return on assets 2.78%

• 200 day moving average 26.95

• Total debt 55.30B

• Book value 25.13

• Qtrly Earnings Growth -11.40%

• Dividend yield 5 year Average 5.80%

• Dividend rate $ 1.41

• Payout ratio 0.00%

• Dividend growth rate 3 year average 19.05%

• Dividend growth rate 5 year average 51.21%

• Consecutive dividend increases 2 years

• Paying dividends since 2006

• Total return last 3 years 57.79%

• Total return last 5 years 16.97%

Conclusion

Investors looking to open a second stream of income should look into selling covered calls. Stocks with high betas such as SCCO, OZM and SNH command higher premiums. If you are bullish on the stock and don't mind owning it a lower price, then you could sell naked puts and potentially open up another income stream.

All charts sourced from dividata.com

Source: 7 Stocks With Splendid Yields As High As 11.4%

Additional disclosure: This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is very important that you check the finer details, do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware.