As the markets whipsawed up and down last week, investors panicked about what to do with their investments. Should they sell before things get worse, or take advantage of opportunities that might be out there? It’s a tough call to make sometimes. The best advice I can give is to stay the course of your investing strategy, whatever that may be.
However, if you have some cash to invest, now is a great time to pick up some really awesome dividend stocks at dirt cheap prices. Companies that pay dividends have illustrated that over time they have outperformed their non-paying brethren. In addition, these same companies tend to be more conservative and more focused on rewarding their shareholders by consistently shelling out those lucrative dividend payments. So if you can take advantage of a time like right now, when the market is already down 10% over the last three months, you might be able to find that hidden gem you’ve been looking for.
To help you on your quest, I ran a screen for financial companies paying dividends above 2%, with P/E ratio’s less than 17, that are trading at least 20% below their 12-month high, and that have garnered the respect of our CAPS investing community with at least a 4 or 5 star rating. I’ve ranked and ordered the results below by the top seven highest dividend payers.
|
Dividend Yield |
P/E Ratio |
% Below 12-month High |
CAPS Rating |
|
|---|---|---|---|---|
|
Resource Capital |
18.8% |
13.7 |
30.8% |
**** |
|
Chimera Investment |
16.8% |
5.4 |
28.9% |
**** |
|
Prospect Capital |
14.4% |
6.1 |
32.0% |
**** |
|
Fifth Street Finance |
13.4% |
10.0 |
31.4% |
**** |
|
Apollo Investment |
13.3% |
6.2 |
32.3% |
**** |
|
TICC Capital |
11.1% |
3.7 |
31.3% |
***** |
|
PennantPark Investment |
11.0% |
7.5 |
25.8% |
***** |
*Source: CAPS Data, 8/15/11
Granted, there are probably some good reasons why some of these stocks are trading so cheaply and have fallen from grace. Chimera, for instance, relies a lot on government-backed paper, so if interest rates go up due to the U.S. credit downgrade, it could continue to see its interest spread decrease. Apollo must also have something scaring investors, as it saw one of the largest increases in short interest during the month of July, settling at around 26.6%, a shockingly high number.
Nonetheless, these stocks are paying absolutely phenomenal dividends, and they are trading extremely cheap, so if you’ve got interest in them, it would pay to do your own due diligence and look into them further.
Seeking out other dividend stocks that could help boost your portfolio? Check out my colleagues brand new free article, “U.S. Downgrade Be Damned: Here’s What I’m Buying Now.“
