5 Low-Priced Companies Paying Substantial Dividends

Jul. 20, 2011 2:23 PM ETARCC, NLY, LUMN, CIM, NYCB10 Comments
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Efsinvestment
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It is indispensable for stocks to provide highly attractive technical indicators like a low P/E ratio, a high estimated EPS growth for the next five years, a high profit margin, a strong upside movement potential, a reasonably-priced valuation. I also prefer investing in stocks with high and consistent dividend yields. A portfolio composed on these criteria is likely to return large profits. I decided to make a list of top five fat-dividend yielders with excellent indicators, that are reasonably priced and have low P/E ratios. (Data obtained from Finviz/Morningstar and current as of the close July 18):

Ares Capital Corporation (ARCC): ARCC will announce its Q2 earnings on August 4. As of the July 18 close, the private equity firm has a market capitalization of $3.10 billion, a P/E of 3.77, and a forward P/E of 9.72. Analysts estimate an 8.17% EPS growth for the next five years, which sounds reasonable given the 17.05% EPS growth of the past 5 years. With a profit margin of 133.77%, and a dividend yield of 9.23%, Ares is a tremendous stock for dividend lovers.

Earnings increased by 96.95% this quarter. Target price implies a 21.5% upside potential in the near term. While ROA is 20.86%, ROE is 31.24%. Gross margin is 71.03%, and P/B is 0.98. The stock is trading 12.98% lower than 52-week high. Although debts are unstable, assets are increasing consistently. It is a marvelous stock to go long, and the current price offers a suitable entry point. It is likely to go $20s. Recent dividend payments of Ares per share are:

Jun 13, 2011

$0.35

Mar 11, 2011

$0.35

Dec 13, 2010

$0.35

Sep 13, 2010

$0.35

Annaly Capital Management (NLY): NLY reported its Q2 market results recently. As of the July 18 close, the NYC-based REIT owned a market cap of $11.06 billion. Annaly has an impressive P/E ratio of 7.67, and a forward P/E ratio of 7.41. Estimated EPS growth for the next five years is 3.00%, which is truly conservative given the 47.72% EPS growth of past 5 years. NLY pays an attractive dividend of 14.61%.

Target price indicates a 5% upside movement potential, and the stock is trading 4.25% lower than 52-week high. SMA50 is 0.48%, while SMA200 is 6.02%. Earnings increased by 82.19% this quarter. Although the company is in serious debt, debt-to assets ratio is going down for the last five years. FBR Capital suggests outperform for Annaly, while Wunderlich and Deutsche Bank recommend buying. Insiders have been exercising options for a while. Cramer is also bullish on NLY. Following is the recent dividend history of NLY:

Jun 28, 2011

$0.65

Mar 29, 2011

$0.62

Dec 23, 2010

$0.64

Sep 30, 2010

$0.68

New York Community Bancorp (NYB): NYB will release its Q2 results on July, 21. The New-York based company has a $6.49 billion market cap, and a 12.06 P/E. Forward P/E ratio is 11.32, as of July 18. Analysts expect the company to have a 6.00% EPS growth in the next 5 years. Profit margin is 35.29%, whereas the company yields a 6.74% dividend.

Debts and assets are unstable. Target price is $18.28, indicating an about 23.2% increase potential. The stock is trading 21.05% lower than 52-week high. Although it has been a rough year of NYB, it surely knows how to sail in this ocean. Current price is an advantageous entry point. I believe the stock will stroll around $17-18. Here are the recent dividend payments of NYB per share:

May 4, 2011

$0.25

Feb 3, 2011

$0.25

Nov 4, 2010

$0.25

Aug 4, 2010

$0.25

CenturyLink, Inc. (CTL): CenturyLink just bought Savvis Inc. The technology company has a market capitalization of $22.72 billion, a P/E ratio of 12.69, and a forward P/E of 13.76, as of the July 18 close. Analysts expect the company to have a 3.00% EPS growth in the next five years. With a profit margin of 13.08%, shareholders enjoyed a 7.67% dividend.

$1000 invested in CenturyLink in November 2008 is about $1720 now. Debt-to assets ratio is slightly going down for the last five quarters. Yields leapfrogged from 7 cents to 63 cents in Jul,2008. Operating margin is 28.5%, while gross margin is 65.6%. Target price indicates a 20.5% increase potential, whereas the stock is trading 16.50% lower than 52-week high. CTL has a strong momentum for three years. I guess the momentum will continue for a while. Recent dividend history is as follows:

Jun 2, 2011

$0.725

Feb 16, 2011

$0.725

Dec 3, 2010

$0.725

Sep 2, 2010

$0.725

Chimera Investment Corporation (CIM): Founded in 2007, Chimera is a REIT operating in the United States. As of the July 18 close, CIM has a market cap of $3.27 billion. It shows a P/E ratio of 5.05, and a forward P/E ratio of 5.39. Analysts estimate a 7.33% EPS growth for the next five years, which is quite reasonable when its 19.18% EPS growth of last 5 years is considered. It pays a whopping dividend yield of 16.35%, whereas profit margin is 71.03%.

Although debts are increasing, assets outrun them. Target price is $4.22, which implies a 32% upside potential. The stock is trading 21.29% lower than 52-week high. P/B is 0.9, and insider transactions for the last six months have increased by 22.33%. Insiders have been buying stocks for a while Although the stock is highly volatile - and although I am not that bullish on this stock - it can return large amounts of profits. Recent dividend payments are:

Jun 28, 2011

$0.13

Mar 29, 2011

$0.14

Dec 29, 2010

$0.17

Sep 30, 2010

$0.18

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Efsinvestment.com website offers simple do-it-yourself type of investment ideas. You can download excel files that can easily calculate the Fair Value of a stock, along with O-Metrix score and Margin of Safety. Investment philosophy is to first determine the maximum loss, and invest accordingly. Like many value investors, we prefer to invest in stocks with the highest dividend yields, and highest EPS growth potentials. Telecommunication and energy stocks in emerging markets are among the favorites. Seeking Alpha offers a great opportunity to become a part of a strong finance network. Based on extensive quantitative analysis, in any market, going short is risky. Statistical analysis shows that technical indicators work only if they are strong enough to convince the majority of the investors. Do not buy a stock at the top, do not sell a stock at the dip.
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