Very few companies can hold on to a high yield with relatively stable business environment -- high yielders tend to have their stock prices pushed even higher and hence lowering the yield. Or, sometimes, seemingly high yield is not sustainable, merely an artificial outcome of beaten down stock price and deteriorating businesses. Future dividend will be cut or eliminated anyway.
The following 5 companies have the combination of good dividend payout (at least 5%), good dividend history (great trailing dividend), and healthy cash flow. These companies can be attractive for active long term investors.
Crexus Investment Corp. (CXS) is a diversified REIT company. It has a market cap of $779.23 million. This company pays out a nice dividend of 10.60%. CreXus Investment acquires, manages, and finances commercial mortgage loans and commercial real estate debts, commercial real properties, commercial mortgage-backed securities, other commercial real estate-related assets, and agency residential mortgage-backed securities. Its price/book ratio is 0.85. Its profit margin was 87.45% and its operating margin was 86.34% over the past year. Its revenue grew by 255.80% over the latest quarter. Stable trading volume suggests a relatively calm market. This month, 2.92 million shares are being shorted. The short ratio of Crexus Investment is 6.50, accounting for 4.40% of floating shares.
Mercury General Corporation (MCY) is a property & casualty insurance company. It has a market cap of $2.25 billion. This company pays a handsome dividend of 5.80%. Mercury General engages in writing personal automobile insurance products. The company also writes homeowners, commercial automobile and property, mechanical breakdown, fire, and umbrella insurance products. It has a reasonable P/E ratio of 10.90. The high PEG ratio suggests that the market expectation may be too high to become reality. It has a profit margin of 7.38%. Mercury General Corporation has a decent operating margin of 9.82%. The company had a net income of $206.29 million and EBITDA of $314.20 million on revenue of $2.79 billion. Its revenue grew by 2.40%, and its net income improved by 26.00% during the most recent quarter. Its operating cash flow was $157.63 million, and its free cash flow was $112.12 million. Over the past five years, the average yield was 5.20.
Telecom Argentina S.A. (TEO) is a diversified communication services company. It has a market cap of $2.31 billion. This company pays a handsome dividend of 7.20%. Telecom Argentina provides telecommunication services to residential customers, businesses, and governmental agencies in Argentina and internationally. It operates in two segments, Fixed Telephony and Mobile Services. At a P/E ratio of 4.21, the stock appears fairly cheap in valuation. A low PEG ratio of 0.32 usually indicates undervaluation. Telecom Argentina S.A. has an enterprise value / EBITDA ratio of 1.34. It has a profit margin of 12.74% and an operating margin of 21.13%, both fairly healthy. The company had a net income of $549.63 million and EBITDA of $1.29 billion on revenue of $4.31 billion. Both its revenue and earnings grew in double digits over the latest quarter, by 23.70% and 10.10%, respectively. Its operating cash flow was $1.06 billion, and its free cash flow was $448.54 million. The recent trading volume is below average. The trailing dividend yield was 7.70.
Two Harbors Investment Corp. (TWO) is a residential REIT. It has a market cap of $2.32 billion. This company pays a handsome dividend of 15.00%. Two Harbors Investment focuses on investing in, financing, and managing residential mortgage-backed securities, residential mortgage loans, residential real properties, and other financial assets. Its stock price is 1.46% below 52-week high, a plus on the technical side. Its price/book ratio is 1.11. Its profit margin was 87.78% over the past year. I like Two Harbors Investment's operating margin of 82.49%, a good sign for the company's financial health. Its revenue brew by 108% over the latest quarter. The trading volume is relatively normal. This month, 10.81 million shares are being shorted. The short ratio of Two Harbors Investment is 3.80, accounting for 5.10% of floating shares. The trailing dividend yield was 14.10.
World Wrestling Entertainment Inc. (WWE) is a diversified entertainment company. It has a market cap of $581.72 million. This company pays out a nice dividend of 6.00%. World Wrestling Entertainment engages in the sports entertainment business. The company develops content centered around its talent, and presents at its live and televised events featuring World Wrestling Entertainment. It operates through four segments: Live and Televised Entertainment, Consumer Products, Digital Media, and WWE Studios. Its price shows near term weakness, close to 52-week low (only 4.97% higher). Its P/E ratio of 18.60 is on the expensive side. Investors should use some cautious because of this valuation. The high PEG ratio suggests that the market expectation may be too high to become reality. WWE has an enterprise value / EBITDA ratio of 5.55. The EV/EBITDA ratio indicates this company is cheap. Its profit margin was 6.48% over the past year. The company had a net income of $31.56 million and EBITDA of $76.53 million on revenue of $487.08 million. Its revenue grew by 2.60%, and its net income improved by 78.20% during the most recent quarter. Its operating cash flow was $61.48 million, and its free cash flow was $39.74 million. Recently, the stock is not traded actively. This month, 3.42 million shares are being shorted. The short ratio of World Wrestling Entertainment Inc. is 19.00, accounting for 13.60% of floating shares. Such a high short ratio means two things: 1. the market is bearish about the stock in general, and 2. short squeeze could easily happen with suitable news. Over the past five years, the average yield was 8.80.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.