Where do you hide?
As an investor hoping to cut some of the volatility in my portfolio for more peace of mind, I’ve been looking for safer places to put my money. I’m not talking about the obvious places where your money basically grows so little that it doesn’t make a difference. I’ve now focused my attention on dividend paying stocks and of course I am matching these up with analyst recommendations. Any dividend/distribution paying company will spark my interest because these stocks tend to hold their value better and there is potential for upside. Dividends are also good from a tax perspective in that they are taxed less. A lot of brave investors bought the high yielding dividend stocks during the market down turn. The lower the stock goes, the higher the yield is so you’re getting more bang for your buck. I don’t want to go into how dividends work as there is enough easily accessible information about this, but do be careful with the companies that you invest in as dividends can be reduced or canceled. BP is now under pressure to reduce or cancel their dividend so that uncertainty is an additional problem for their stock. Sometimes stocks will pay a special dividend to spark some interest to their investors. Hot Topic is an example of this.
On April 7th, the company announced a one-time cash dividend of $1 to be paid May 3 to shareholders of record as of April 19. This immediately caused the stock price to raise because suddenly the stock was worth at least $1 more since investors would be getting that back. Unfortunately, since it was a one-time dividend and a subsequent earnings disappointment, the stock has dropped dramatically from its peak. The high in April was $9.96, and immediate drop was followed after investors were no longer eligible for the one-time dividend, and now it’s trading at about $5.41. I had some shares of this company but sold out when things were not looking right which resulted in about a 10% loss. It definitely could have been worse.
I was looking at the past 2 days to find which stocks were upgraded and from those stocks, which ones have a dividend and here is what I found:
Digital Realty Trust – DLR price target of $64, 3.4% yield, current price $59.80
Werner Enterprises – WERN – price target of $28, 0.9% dividend yield, current price $22.68
Agnico-Eagle Mines – AEM – price target of $76, 0.3% dividend yield, current price $58.26
Deere – DE – no price target, 2.1% dividend yield.
Renasant Corporation – RNST , no target price 4.7% dividend yield, current price $13.88
Positive recommendation combined with a decent yield or a balance of the 2 make these stocks worth looking at.. Of course you’ll need to do more research for each stock especially in terms of the history of paying out and increasing dividends, whether it is downward or upward trending, financial statements, etc. etc.
I’ve never even heard of Renasant Corporation but apparently it’s a financial company.
I’d also like to talk about chasing dividends for quick gains but I’ll leave it for another post.