5 Huge Dividends Our Analysts Bought

Let's be honest: Investing has been downright scary for the past four months.

The stock market has tumbled almost 15% since the beginning of May; with credit downgrades at home, and even more serious problems brewing in Europe, it seems that now is not the time for the weak at heart.

But instead of sitting idly by while waiting for the storm to pass, I encourage you to consider these fat dividends that our Rising Stars have already bought. If the waters continue to be choppy, these monster yields will be paying you while you wait for things to clear up.

Waste Management (NYSE: WM  )
Rising Star leader Alyce Lomax bought in to this company back in late June. Her socially conscious portfolio initially found a spot for Waste Management because of its green efforts.

But the company's dividend yield and stellar balance sheet didn't hurt, either. Moreover, as she put it, "Although annual profits have shrunk over the last several years, the company restarted revenue growth 2010 with a 6.1% sales boost, and it's generated more than $1 billion in free cash flow annually for years now."

Nucor (NYSE: NUE  )
Decades ago, Nucor completely rewrote the book on steel. Its mini-mills were able to produce the material for a fraction of the cost of the established powers in the field.

Today, Nucor is all grown up and paying out a regular, substantial 4.4% dividend yield. Rising Star Jordan DiPetro chose Nucor as the inaugural stock in his portfolio. He pointed to a rise in domestic spending, emerging-market growth, and Nucor's cutting-edge technology as three catalysts for growth.

If that growth doesn't occur overnight, Jordan's just fine waiting: "[Nucor] pays a great dividend, has paid 150 consecutive dividends, and has among the lowest payout ratio of all its peers."

  • Add Nucor to your Watchlist.

Telefonica (NYSE: TEF  )
For this Spain-based telecom pick, we again head back to Rising Star Jordan DiPetro.

In presenting his thesis for Telefonica, Jordan pointed out that fear was pulling the stock down. Unemployment in Spain at the time exceeded 20%, and since then, things have only gotten worse. This may help explain why the company's yield has jumped from 6.2% when Jordan bought the company to a double-digit yield today.

But judging the company based on the employment picture in Spain alone is a huge mistake, according to Jordan: "Telefonica may be a company tied to the Spanish economy, but don't let that fool you; it's extremely geographically diversified, and most of its growth in the years to come will occur in Latin America and Eastern Europe. 42% of the company's 2010 revenue so far has come from Latin America, while another 25% has come from European countries besides Spain."

Veolia Environnement (NYSE: VE  )
What's the most valuable commodity in the world?

Gold? Oil?

If you're thinking with the big picture in mind, you'd know that although these two are important, absolutely nothing is more important than water. Consider:

  • More than one-sixth of the global population does not have access to the necessary amount of safe freshwater to ensure basic health.
  • Fully 2.5 billion people live without basic water sanitation.
  • In developing nations, 70% of industrial waste is dumped, untreated, into water supplies.
  • Over the past 20 years, more than 600,000 people have died related to natural disasters, of which 90% were water-related events.

As Jordan DiPetro (once again) points out, no one stands to benefit from these circumstances more than Veolia: "Veolia has been around for more than a century and has been an expert in its field for longer than any other company. … Think about the statistics mentioned above, and then consider that Veolia derives about 35% of its revenues from wastewater treatment and about 27% from environmental cleanliness."

And you, dear Fool, will benefit from its whopping 12.8% dividend yield as well.

Annaly Capital (NYSE: NLY  )
There is perhaps no field more ripe with mind-boggling dividends than real estate investment trusts (REITs). These types of companies are required to pay out 90% of their earnings in dividends and in return pay no taxes.

Annaly's current yield of 14.6% is one of the highest amongst the Rising Star portfolios, and it has been purchased by three different analysts. But with so many mortgage REITs out there with high yields -- American Capital Agency (Nasdaq: AGNC  ) pays out 19.7% and Chimera Investment (NYSE: CIM  ) pays out 18.3% -- why choose Annaly?

Fool Ilan Moscovitz ended up buying both Annaly and Chimera for his portfolio. But he took a bigger position in Annaly, noting that "Annaly's bigger [and] has an ultra-safe portfolio, a long track record, and a strong management team headed up by Michael Farrell."

Dividends galore!
If the safety and staying power of dividend stocks are appealing to you, consider The Motley Fool's most popular special free report: 13 High-Yielding Stocks to Buy Today. Inside, you'll find out about 13 different companies that can help safeguard your portfolio against uncertain markets. The report is yours today, absolutely free!

Fool contributor Brian Stoffel owns shares of Nucor. You can follow him on Twitter at @TMFStoffel. The Motley Fool owns shares of Nucor, Waste Management, Chimera Investment, Telefonica, Annaly Capital, and Veolia Environnement. Motley Fool newsletter services have recommended buying shares of Waste Management and Nucor and writing a covered strangle position in Waste Management. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On September 13, 2011, at 6:17 PM, rockbox64 wrote:

    No growth in Telefonica. It'll get back to 23-24, the divvy drops, and then you Spain takes a chunk out of the divvy before you get it. And you only get it twice a year which cuts down on the compounding power. I've been in TEF. I know. So you end up with a 7% divvy with no growth and a tax. Might as well buy T.

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