Solid yielding stocks without stretched valuations are becoming harder to find as the market rally get extended. Recently I came across a 4% yielder with cheap valuations and some recent positive catalysts. It is Parkway Properties (PKY) based in sunny Florida.
Recent catalysts for PKY:
- An insider bought 25,000 shares in the last week. This is on top of the more than 200,000 shares that other insiders have purchase in the last six months.
- The company just approved a 50% increased to its dividend payout to 48.5 cents a share a year.
- Stifel Nicolaus and Cantor Fitzgerald upgraded or initiated the shares as a "buy" in the second quarter.
"Parkway Properties is a real estate investment trust (REIT), engages in the operation, acquisition, ownership, management, and leasing of office properties. It operates and invests principally in office properties in the southeastern and southwestern United States and Chicago." (Business description from Yahoo Finance).
Four additional reasons PKY has value at $11.50 a share:
- PKY now will yield 4.2% and has more than tripled its dividend payout since it had to cut them to the bone in the financial crisis.
- The stock is cheap for a high yielder at just 6% over book value and 9.5 times forward earnings.
- The company has beat earnings estimates three of the last four quarters and the average beat over consensus during that time period is 14%.
- The company's portfolio is in the Sunbelt which has better long term growth potential than the nation as a whole. Analysts expect double digit revenue growth in FY2012 and solid 7% sales growth in FY2013.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PKY over the next 72 hours.