By
Jordan DiPietro
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More Articles
January 10, 2011
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Contrarian investors should utilize times like this to differentiate between stocks that are dropping for fundamentally sound reasons -- and those stocks that are simply being dragged down because of general market concerns. Sure, there's plenty to worry about -- gigantic federal deficits, sovereign debt problems in Europe, an economic slowdown in China. But let's not forget that in the midst of all of this volatility lies the prospect to grab some great companies at dirt cheap prices.
In particular, I'm a huge fan of dividend stocks. Renowned professor Jeremy Siegel has illustrated that from 1957 to 2003, when reinvesting dividends, the S&P's 100 highest-yielding stocks outperformed the market by an average of 3 percentage points. Over a long period of time, 3 percentage points can really add up. So if you can find dividend stocks trading cheaply and can separate the good from the bad, you may have found yourself a real winner.
In this regular series, I run a screen for dividend stocks that have gotten crushed in the past three months, in addition to companies that are trading at low P/Es. Below are the top seven health-care dividend-paying stocks (above 1%) that have gotten beaten down the most, in consecutive order, additionally rated by our own 170,000-strong CAPS community.
|
Company
|
Dividend Yield
|
13-Week Price Change
|
P/E Ratio
|
CAPS Rating (out of 5)
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| Psychemedics (NYSE: PMD ) |
5.6% |
(13.8%) |
16.0 |
***** |
| Utah Medical Products (Nasdaq: UTMD ) |
3.6% |
(11.8%) |
15.9 |
**** |
| AstraZeneca (NYSE: AZN ) |
4.9% |
(10.1%) |
8.6 |
**** |
| Tianyin Pharmaceutical (NYSE: TPI ) |
3.5% |
(8.6%) |
6.7 |
***** |
| Abbott Labs (NYSE: ABT ) |
3.6% |
(8.4%) |
16.0 |
***** |
| GlaxoSmithKline (NYSE: GSK ) |
5.2% |
(6.9%) |
15.8 |
**** |
| Teleflex (NYSE: TFX ) |
2.5% |
(6.9%) |
13.4 |
**** |
Source: Motley Fool CAPS. Data current as of Jan. 10.
A Foolish final thought
Besides Tianyin Pharma, which has already cut its dividend I don't see an immediate risk of any of the companies mentioned above cutting or suspending their dividends, yet they're being priced at extremely attractive levels. This could be the perfect time to jump into the market to find that outrageous dividend stock you've been looking for. With the stock market looking up and investors looking for different ways to generate income, dividend-paying stocks such as these could have the potential to give you exactly what you're looking for.
Interested in what the best stocks of 2011 are? Then feel free to click here to read our brand new free article!
This article has been updated to reflect a change in Tianyin Pharmaceutical’s dividend policy. The Fool regrets the error.
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