Most investors don't keep tabs on their companies' fundamental values. That's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home run stocks that provide the market's best returns.
We can help you keep tabs on your companies with MyWatchlist.com, our free, personalized stock-tracking service. Here are three dividend stocks for your watchlist.
1. Mesabi Trust (NYSE: MSB )
Similar to Great Northern Iron Ore (NYSE: GNI ) , Mesabi Trust is a royalty trust with large holdings of iron ore and is a great way to gain direct exposure to the metal. The ore is mined by Northshore Mining, a subsidiary of Cliffs Natural Resources (NYSE: CLF ) . Shares took a beating the past few months, after the company announced that its first-quarter distribution would be more than 50% lower than last year's and more than a 90% down from the previous quarter's.
However, the drop in the dividend should not have come as a surprise to anyone who has researched the stock. There's only one way to get the ore out of the area, and that's the St. Lawrence River. Every year, the river freezes over, stopping shipments from the area, so the trust makes money only on what it can get out before the river closes. As such, the Q1 distribution is always very small. The overreaction to the dividend drop is a great opportunity for investors, especially if you believe that iron ore is poised to continue its bull run.
- Add Mesabi Trust to your Watchlist.
2. CAPS' Weekly Top Stock Idea: Silver Wheaton (NYSE: SLW )
Each week, I cull a top stock idea from the pitches on CAPS, The Motley Fool's 170,000-member free investing community. Silver Wheaton, a pick from December, caught my eye, since its shares have fallen over the past three months. Silver Wheaton, along with fellow silver companies Hecla Mining (NYSE: HL ) and Silvercorp Metals (NYSE: SVM ) , are focused on the production of silver. While the company doesn't pay a large dividend, $0.12 for a 0.4% yield, the fact that a silver company is confident enough to pay a dividend says loads about its prospects.
With long-term contracts for silver at $4 an ounce, Silver Wheaton is profiting wildly from the rise in silver prices over the past year. Former CEO Peter Barnes said before he left, "I don't see any reason why in the future we couldn't be paying out 40%, 50%, or 60% of our cash flow every year in dividends." As the company's current free cash flow payout ratio is just 9.5%, that would be a big increase. See the pitch selected for CAPS' weekly top stock idea. If you want to follow my weekly picks, you can subscribe to the series' RSS feed or follow it on Twitter.
- Add Silver Wheaton to your Watchlist.
3. Newmont Mining (NYSE: NEM )
Newmont Mining is a gold miner with an innovative dividend policy. This past year, the miner started paying a regular quarterly dividend, which was initially $0.15 per share. It subsequently raised its dividend to $0.20 and instituted a dividend policy of increasing its quarterly dividend $0.05 for each $100 per ounce rise in the average realized gold sales price over the preceding quarter. The second-quarter dividend was based on the first quarter's average gold sales price of $1,382 an ounce (or between $1,300 and $1,399). If gold prices continue rising, Newmont shareholders will be duly rewarded.
- Add Newmont Mining to your Watchlist.
My Foolish bottom line
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