In an effort to boost the economy and make it cheaper for consumers to buy cars, houses and other products on credit, the Federal Reserve has lowered and held interest rates down to very low levels. This is not likely to change any time soon, as the economy continues to struggle. In fact, the Federal Reserve plans to keep interest rates at very low levels (near zero) for about two more years, maybe more. It's unfortunate for savers and retirees, many of whom were counting on being able to park their money in a certificate of deposit and earn a decent rate of return.
The best way to solve this problem is by turning to dividend stocks, some of which can earn far more than any money market or savings account ever could. Of course, there is more risk with stocks, but you will be very well paid to take on this risk and you can add a dimension of safety by making sure your portfolio has some diversification. The stocks below give investors a chance to lock in very high yields (a portfolio average of over 1% per month or over 12% annually), while offering some diversification and the possibility for substantial capital gains as well:
Calumet Specialty Products Partners (NASDAQ:CLMT) processes and sells fuels and specialty products such as asphalt. This company has been in business since 1916. This stock was trading around $20 just a few weeks ago and it now offers a very strong dividend yield of over 11%, plus a chance for capital gains if the stock rebounds back to former levels.
Here are some key points for CLMT:
- Current share price: $17.95
The 52 week range is $15.99 to $24.95
Earnings estimates for 2011: 73 cents per share
Earnings estimates for 2012: $1.74 per share
Annual dividend: $2 per share which yields 11.3%
SPDR Barclays Capital High Yield Bond (NYSEARCA:JNK) is an exchange traded fund (ETF) that invests primarily in high yield bonds, which some investors call junk bonds. These bonds pay a higher rate of interest over other corporate bonds because they do not have an investment grade rating. This sector has been dropping due to recession concerns but it looks like a good place to invest once the market hits bottom.
Here are some key points for JNK:
Current share price: $37.59
The 52 week range is $34.09 to $41.32
Earnings estimates for 2011: n/a
Earnings estimates for 2012: n/a
Annual dividend: about 24 cents per month, per share which yields about 9%
Telecom Argentina SA (NYSE:TEO) offers both fixed and wireless telecommunication services in Argentina. This stock was trading for about $23 just a few weeks ago and recently hit a new 52 week low around $17 before rebounding. The yield looks safe and the stock looks like a strong buy on any dips.
Here are some key points for TEO:
Current share price: $20.04
The 52 week range is $16.90 to $27.23
Earnings estimates for 2011: $2.97 per share
Earnings estimates for 2012: $3.23 per share
Annual dividend: $2.21 per share which yields 11.3%
Energy Transfer Partners (NYSE:ETP) provides natural gas pipeline and transportation services, and sells propane in the United States. This stock offers a strong dividend payout and yields almost 9%. It is also trading near the 52 week lows, so the shares look attractive now for both the dividend and potential share price appreciation.
Here are some key points for ETP:
Current share price: $41.41
The 52 week range is $38.08 to $55.50
Earnings estimates for 2011: $1.92 per share
Earnings estimates for 2012: $2.50 per share
Annual dividend: $3.58 per share which yields 8.7%
Invesco Mortgage Capital (NYSE:IVR) is a mortgage real estate investment trust (REIT) company, based in Georgia. This is one of the highest yielding mREIT stocks and it is also trading at a very large discount to book value. The stock yields about 22% and the discount to book value is about 20%. The stock appears extremely undervalued.
Here are some key points for IVR:
Current share price: $14.38
The 52 week range is $12.55 to $24.07
Earnings estimates for 2011: $3.74 per share
Earnings estimates for 2012: $3.55 per share
Annual dividend: $3.20 per share which yields 22.3%
Capstead Mortgage Corporation (NYSE:CMO) is a real estate investment trust (REIT) that invests in residential mortgage-backed securities. The book value is $12.51. With a dividend yielding over 15%, and a share price below book value, this looks like a great buying opportunity.
Here are some key points for CMO:
Current share price: $11.68
The 52 week range is $10 to $13.95
Earnings estimates for 2011: $1.79 per share
Earnings estimates for 2012: $1.67 per share
Annual dividend: $1.76 per share which yields 15.1%
Alliance Bernstein Holding (NYSE:AB) is an investment management company offering products and services such as mutual funds, financial consulting, and institutional services. This sector has been hit by the market correction because some investors have pulled money from stock investments and that can reduce fees for companies like this. However, the stock is starting to trade at bargain levels and it looks like a good buy on dips.
Here are some key points for AB:
Current share price: $14.30
The 52 week range is $12.56 to $26.72
Earnings estimates for 2011: $1.49 per share
Earnings estimates for 2012: $1.51 per share
Annual dividend: $1.36 per share which yields 9.5%
Data is sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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.