Two weeks ago, we wrote about the allure of dividends, an allure that has entranced us since we launched here in 1997. With interest rates at 40-year lows and the disappearance of the 30-year T-bill, if you're looking for investments with decent yields, you may need to consider dividend-paying stocks.
Last week, we listed six high-yielding stocks, including some that Fool readers and participants shared on the discussion board. Each of the stocks that we listed offers fee-friendly (meaning no fees to buy shares or reinvest dividends) direct investment plans, on top of their decent yields.
Today, we add new names to our list of high-yield stocks. Whereas last week we listed smaller, typically unknown names, today we highlight some large companies that you'll likely recognize.
Too often, a high-yielding stock is a sign of business problems, but in our list below, each company should prove strong enough to maintain its dividend and keep growing the business.
As was the case last week, all of these companies offer free dividend investment plans, and some even offer discounts on optional cash purchases and dividend reinvestments. Additionally, all these companies require that you own only one share of stock to enroll in its investment plan. These are all beautiful things.
Goodrich (NYSE: GR), 4.8% yield, is the former BF Goodrich, but this company isn't about tires. Goodrich has two business segments: Aerospace and Engineered Industrial Products, including gaskets, seals, packing, bearings and diesel engines. The company grew sales 14% in the nine months ended September, to $3.13 billion (partly thanks to acquisitions), while net income rose 33% to $222 million. With a P/E of 5, a book value of nearly $15 with a stock price of $23, and a 4.7% dividend yield, Goodrich apparently doesn't get much respect today, but own it long enough and your portfolio could eventually be applauded.
Pitney Bowes (NYSE: PBI), 3.0% yield, took a hit as the anthrax attack unfolded, presumably because of its global mailing business. If anything, however, the attack should benefit sales at Pitney Bowes as mailing systems are upgraded. The company also sells enterprise solutions and offers financial services. The stock trades at a 17 P/E and yields 3%.
Resource Bancshares Mortgage Group (Nasdaq: RBMG), 5.3% yield, also offers a 5% discount on additional stock purchases in its Drip plan, and a 5% discount on reinvested dividends, all making for significant yield potential. The company lost money in its two recent quarters, although it's usually profitable. It's a small operation, however, so riskier than average, but the yield and the discounts make it interesting for investors who will understand a holding company with a mortgage banking focus.
Genuine Parts (NYSE: GPC), 3.4% yield, is a service organization that distributes automobile and industrial replacement parts, office products and electronic parts. For the nine months ended September, it had $6.2 billion in sales, down 1%, and operating margins of about 7%. It trades at a 15 P/E. The stock has had a good year, rising nearly 50% excluding the dividend. The past three years the stock had declined, however. For yield investors, GPC may be a company to watch and more seriously consider when the dividend yield is about 50% higher, and the stock 50% lower, as was the case recently.
PNC Financial Services (NYSE: PNC), 3.3% yield, is, like Goodrich and Pitney Bowes, another company that you probably recognize. PNC Financial is a large bank holding company and financial holding company, offering several financial services, from corporate banking to real estate finance. The stock is at a 14 P/E and about 2.2 times book value, which is reasonable when you remember what we found in our Mellon Financial (NYSE: MEL) study. PNC, as with the financial firms that we mentioned last week, has a decent yield, a good-looking business and history, and a free investment plan.
Duke Realty (NYSE: DRE) has a 7.6% yield, and a 12 P/E. Here we enter the realm of Real Estate Investment Trusts, or REITs. REITs typically offer high yields, low P/Es (for those of you who are reassured by such things), and other perks (including tax benefits), as the Fool has explained. (Aside from explaining REITs, that link also names several REITs that Warren Buffett owns or has owned.) Duke Realty invests in properties in the Midwest and South that are typically leased to non-commercial tenants. In addition to its 7.6% yield, the company offers a 3% discount on reinvested dividends.
Literally dozens of high-yield REITs exist and offer free investment plans, some with discounts like Duke. If you're interested in these cash-paying investments (some with double-digit yields), read the article linked above and start your research!
Thank you to everyone who posted high-yield stocks on the Drip Companies board. Have a peaceful Thanksgiving next week, one rich in personal dividends, and Fool on!