Dividend stocks have been performing well, and this trend could be poised to continue as investors remain starved for income in a low interest rate world. The trouble is so many dividend stocks are trading at or near 52-week highs now, and that makes it harder to find good value plays that are still worth buying. However, one of the most widely followed stock-pickers, Jim Cramer recently endorsed the shares of a high-yielding stock, which is worth considering now: PDL BioPharma, Inc. (PDLI).
PDL Biopharma was formerly known as "Protein Design Labs". It owns key patents on antibodies that are immune system proteins that help the body defend against pathogens and toxins. Monoclonal antibodies are able to selectively target diseased cells, while leaving healthy cells alone. This technology has been widely used by many leading biotechnology and pharmaceutical companies including Elan Corporation (ELN) with Tysabri and Genentech with Avastin and other treatments.
PDL Biopharma manages and licenses these antibody patents and royalty assets, which provides it with a steady stream of cash flow. The company uses this stable revenue source to pay shareholders a very compelling dividend yield of nearly 8%. The earnings estimates easily cover the dividend payout, so it is possible that the dividend could rise in the future.
The company recently reported solid financial results. For the second quarter of 2012, it announced net income of $73.5 million, or 52 cents per diluted share. This compares very favorably with net income of $70 million, or 38 cents per diluted share, for the same quarter of 2011. Since 2004, PDL's revenues have averaged year-over-year growth rates of more than 20%, and this growth increases the likelihood of future dividend hikes.
Like many dividend stocks, this one has been rising so it makes sense to consider buying on dips.
Here are some key points for PDLI:
- Current share price: $7.70
- The 52 week range is $5.15 to $7.86
- Earnings estimates for 2011: $1.14 per share
- Earnings estimates for 2012: $1.33 per share
- Annual dividend: 60 cents per share, which yields 7.8%
Data is sourced from Yahoo Finance.
Disclaimer: 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.