Most investors don't keep tabs on their companies' fundamental values. That's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home run stocks that provide the market's best returns.
We can help you keep tabs on your companies with MyWatchlist.com, our free, personalized stock-tracking service. Here are three dividend stocks for your watchlist.
1. InterDigital (Nasdaq: IDCC)
Similar to Qualcomm (Nasdaq: QCOM), InterDigital holds patents on key wireless technology. As the recent $4.5 billion sale of Nortel's wireless patents shows, these assets are definitely valuable. InterDigital has been raking in the dough from its wireless patents and is working on further enhancements that should lead to more growth for years. It's also currently sitting on $11.60 per share of cash and no debt. Shares have risen the past few weeks but still trade for a low, cash-adjusted P/E of just under 12. While you're waiting for the market to revalue the stock, the company pays a $0.40 dividend for a yield of 0.9%. Not much, but it's still something to tide you over while you wait. Definitely one to watch.
- Add InterDigital to your Watchlist.
2. CAPS' Weekly Top Stock Idea: Microsoft (Nasdaq: MSFT)
Each week, I cull a top stock idea from the pitches on CAPS, The Motley Fool's 170,000-member free investing community. Microsoft, a pick from January, caught my eye, since its shares have fallen over the past six months. Microsoft is no longer a tech darling, but it's still dominant in its markets, generates loads of cash, has a rock-solid balance sheet, and pays a 2.5% dividend while you wait. For all this, you have to pay only 10 times earnings, compared with Apple's (Nasdaq: AAPL) 17 P/E or Google's 21 P/E -- and neither of those stocks pays a dividend. See the pitch selected for CAPS' weekly top stock idea. If you want to follow my weekly picks, you can subscribe to the series' RSS feed or follow it on Twitter.
- Add Microsoft to your Watchlist.
3. Cisco Systems (Nasdaq: CSCO)
Cisco, like competitors Juniper Networks (Nasdaq: JNPR) and Riverbed Technology (Nasdaq: RVBD), is a networking company selling products that allow servers, computers, and other devices to connect to each other, using the Internet. Unlike its competitors, and similar to Microsoft, Cisco is dominant and cheap any way you look at it.
Cisco trades for a P/E of 12 and a P/FCF of 9.3, and has a rock-solid balance sheet, with net cash of just over $25 billion, or 30% of its market cap. Some dismiss its cash hoard, since most of it is overseas, but even if it were all brought back and taxed at a 35% tax rate, the company would still have a net cash position of $10 billion. On top of all this, Cisco pays a 1.5% dividend and has plenty of room to expand it. Furthermore, if a tax holiday for repatriating cash were instituted, Cisco would be able to bring its cash over and pay a large special dividend. This stock is definitely one to watch.
- Add Cisco to your Watchlist.
My Foolish bottom line
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