Tuesday, June 19, 2012

6 Stocks With High Dividends And High Returns

Finding investments with solid returns is not an easy task. In the current economy, investors are lucky to find a stable investment like a savings account, bond or CD that pays more than a couple percentage points - not even enough to cover the cost of inflation. In this scenario, a dollar today is worth more than a dollar tomorrow, meaning that an investor could actually lose money in spite of having a positive return on his investment. This reality is forcing many investors, including the most risk-averse, to look toward investments that offer greater reward, like high-dividend stocks.

Obviously, when it comes to investing in dividend-yielding stocks, investors have to look at more than just which company is offering the greatest return - dividends are not guaranteed and they tend to be offered to compensate investors for slow growth. Instead, investors looking for dividends need to concentrate on stocks that yield high dividends while providing high returns. We compiled a list of four dividend-yielding stocks. Each company on our list is a large cap company with low forward P/E ratios, dividend yields over 5% and returns over 7% in the last 13 weeks:

CenturyLink, Inc. (CTL) provides communications services, including voice, Internet and data, in the US. It has a $23.21 market cap and a forward P/E ratio of 14.57. CTL offers a dividend yield of 7.60% and has a beta of 0.54. Its biggest competitor is AT&T (T). T is much bigger, with a market cap of $180.15 billion, but CTL offers a higher dividend yield (T pays 5.80%). CTL recently traded at $37.58. It has returned 7.74% in the last 13 weeks.

Southern Copper Corp. (SCCO) is involved in the mining, exploration and refining of copper ores. It has a $30.24 market cap and a forward P/E ratio of 13.94. The company offers an 8.00% dividend yield and has a beta of 1.7. SCCO's closest competitor is Freeport McMoRan Copper & Gold (FCX). In comparison, FCX pays a 2.30% dividend yield and has considerably less revenue growth. SCCO has quarterly revenue growth of 38.80% compared to FCX's -25.70%. SCCO is currently trading at $35.23 a share. It has returned 22.31% in the last 13 weeks.

Plains All American Pipeline LP (PAA) is engaged in the transportation, storage and marketing of crude oil, refined products and other petroleum products. It has an $11.27 market cap and a forward P/E of just 17.38. It offers a 5.40% dividend yield and has a super low 0.36 beta. Its closest competitor is Enterprise Products Partners (EPD). In comparison, EPD is larger, with a market cap of $42.55 billion. However, in spite of the considerable difference in size, PAA has revenue that is roughly three times its market cap, while EPD's market cap is roughly the same as its revenue ($42.31 billion). EPD is also priced higher relative to its forward earnings at 21.54. PAA recently traded at $75.58 a share. It has returned 16.71% in the last 13 weeks.

HealthCare REIT, Inc. (HCN) is a healthcare real-estate investment trust (REIT). It has a $9.89 billion market cap and a 14.66 forward P/E ratio. HCN pays a 5.20% dividend yield and a beta of 0.92. HCN's closest competitor is HCP, Inc. (HCP). HCP is larger than HCN, with a market cap of $16.87 billion but HCN has higher revenues (HCN's $1.23 billion vs. HCP's $1.61 billion) and pays a higher dividend than HCP's 4.70%. HCN is recently traded at $55.30 a share. It has returned 8.43% in the last 13 weeks.

Morgan Energy Partners (KMP) owns and manages energy transportation and storage assets. It has a $29.51 billion market cap and is currently priced at 33.80 times its forward earnings. The company currently pays a 5.30% dividend yield. Last quarter, KMP returned 28.07%. It recently traded at $88.25 a share. Analysts give it a one-year target estimate as high as $90 a share.

Enterprise Products Partners has a $42.64 billion market cap. The company currently pays a 5.10% dividend yield and is priced at 21.55 times its forward earnings. Last quarter, EPD returned 17.39%. It recently traded at $48.98 a share, with a one-year target estimate as high as $54.00 a share.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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