Stocks on the Road to Greatness

For every stock out there screaming, "buy me," others simply give us a nudge and a nod. While all the attention might be focused on their five-star peers, we can sift through Motley Fool CAPS to find four-star stocks giving us the "high sign" that they're approaching greatness. 

These opportunities -- including familiar names and beaten-down companies -- rank higher than most of the other 5,400 starred companies, and it pays to investigate their potential. For consideration today I've got a pair of stocks on their way to fame and glory.

Source: Motley Fool CAPS.

As the 180,000-member CAPS community has chosen these two companies as less obvious sources for tomorrow's great buys, let's see why they might merit your attention.

In the sight of greatness
We're likely to see both real estate investment trust Chimera Investment and silver miner Hecla Mining benefit from Fed policy to go full bore on keeping the markets liquid. It will keep interest rates at or near 0%, allowing Chimera to profit from the spread between what it borrows and what it invests, and will simultaneously inflate asset prices.

The problem for REITs like Chimera and American Capital Agency (Nasdaq: AGNC) is the low-rate environment also encourages homeowners to refinance their mortgages, which replaces better-yielding investments with lower-yielding ones. Of course, the flip side is that falling interest rates decrease its financing costs, possibly resulting in a boost to net interest income.

Having steadily cut its dividend over the course of the year, Chimera joins other mREITs, such as American Capital Agency, Annaly Capital Management (NYSE: NLY), and Capstead Mortgage, in reducing its payout. Although it started off March by announcing it was preserving its $0.11 dividend -- which currently produces a yield of 14.6% -- it continues to pay out more than what its earnings are, so we have to wonder whether it will be sustainable. The company also announced it was delaying the filing its annual report.

With employment numbers out today running ahead of expectations, it's likely to provide a psychological boost to the market as it will forestall a new round of easing. Highly rated CAPS All-Star jwray01 notes an anomaly with Chimera's prepayments that ought to work out for it:

Fundamentally undervalued. PB well below 1 and very high P/E. They bought MBS below par value so increasing prepayments will help them. Default risk is oversold due to the recent housing crash.

Add Chimera Investment to your watchlist to receive notification of when it does file its annual report, and tell us in the comments section below if you think Chimera's dividend will be sustainable.

Lucky 2013?
Although Fed Chairman Ben Bernanke's testimony initially caused precious metals to fall because of his optimism on the jobs market -- and today's 221,000-job gain would seem to back it -- look for gold and silver to resume their bull market and for Hecla Mining to be one of the main beneficiaries of the run.

The embattled silver miner suffered a setback recently when its lead Lucky Friday mine shut down by regulators until 2013. It faces a flat future for the time being as a result, with production numbers being hurt. But First Majestic Silver and Silvercorp Metals have come out with some robust numbers, suggesting that the industry as a whole is still doing well.

The Lucky Friday mine remains a world-class mine that, once its issues are settled, will be producing silver for decades to come. At the same time, it maintains significant production volume from its Alaskan project, Greens Creek, and with no debt, plenty of cash, and an untapped line of credit, Hecla should shine as the inflationary forces the Fed has unleashed eventually make their presence known.

CAPS member Yeti434 finds the silver miner to be a solid, long-term investment:

With silver resources on the rise I think HL is a pretty good play into the mining sector. Consider this, silver resources now stand at 281million oz, and reserves are at 148million oz. Well, that means that, since there are 5,481,277 shares of HL out there, each share is worth about 51oz. of silver resources. On top of that, it pays a dividend, and a low P/E.

Add Hecla to the Fool's free portfolio tracker and let us know on the Hecla Mining CAPS page when you think this silver shop will regain its luster.

A great opportunity for you
Investor sentiment suggests these four-star investments are on their way to five-star greatness, but if you're looking for additional dividend-paying opportunities, I suggest you check out "Secure Your Future With 11 Rock-Solid Dividend Stocks," a special report from The Motley Fool about some serious dividend dynamos. I invite you to grab a free copy to discover everything you need to know about these 11 generous dividend payers -- simply click here.