Looking For Fixed Income? You've Come To The Right Place

Includes: CTL, DUK, EXC
by: Matt Schilling

I happen to be a very big proponent of the Buy & Hold and the DRIP (dividend re-investment programs) schools of thought when it comes to investing. I like big yields and I love fixed income, which is why I've compiled this list of stellar dividend stocks that should boost any fixed income portfolio.

Century Link, Inc. (CTL) - Founded in 1968 and one of the leaders in the integrated telecommunications arena, Century Link currently yields a whopping 7.6%. Based in Monroe, Louisiana and engaged in strategic partnerships with both DirecTV and Verizon Wireless, CTL offers a wide range of products and services to both individual and business based telecom customers. In 2011, CTL announced they were entering into the cloud computing space when they acquired Savvis for $2.5 billion.

On May 9th Century Link, Inc. will be reporting quarterly earnings and the stock could see a much needed boost if EPS is greater than what the street is expecting. Analysts are calling for CTL to earn $0.58/share on revenue of $4.61 billion, however a ranger of $0.56/share - $0.63/share isn't out of the question. If CTL surpasses estimates (which most signs indicate they should), the stock could see a near-term 4%-6% pop and a dividend increase would most likely follow. If they happen to miss earnings, and I'm talking a slight miss (anywhere from $0.01 - $0.06), the stock could drop some and create a very nice buying opportunity for the fixed income investor.

Duke Energy (DUK) - Founded in 1916 and based in Charlotte, North Carolina, Duke Energy operates as one of the leading providers of energy solutions in both the US and Latin America. DUK yields 4.9% and currently trades with a P/E ratio of 15.9 making it pretty affordable a very attractive dividend stock.

There are two catalysts investors need to consider before investing in DUK. A pending merger with Progress Energy (PGN) valued at $26 billion dollars could revalue the 'new' company as well as toggle its current yield, even though I don't see much difference given the fact both companies have 4% yields. Upcoming quarterly earnings will affect the short term activity of DUK. Analysts are calling for an average EPS of $0.38/share on $3.68 billion in revenue, and I agree that Duke should come right in line with those estimates.

Exelon Corporation (EXC) - Founded in 1887 and headquartered in Chicago, Illinois, Exelon is a utility service company focused on generating energy through hydro, nuclear, fossil, and renewable energy resources. EXC currently yields 4.0% and trades with a P/E ratio of 10, making it not only affordable but very cheap but most standards. Exelon has paid a dividend to its shareholders for the last 128 consecutive quarters.

Exelon trades pretty close to its 52-week low, and I think there's great upside potential. Earnings are due out May 4th and expectations are calling for $0.82/share, which is much lower than year ago EPS, but improved sales growth and positive guidance could pop the stock. This will be Exelon's first quarterly report after its acquisition of Constellation Energy, and given the supply contract that was recently renewed by the State of California, EXC should begin to see how well this transaction will pay off.

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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