Many investors are looking for value after the sell-off, but aren’t convinced the sell-off is over. Isn’t it always that way, though? When was the last time you were convinced about much of anything in the market? Few thought March 2009 was a low. Few thought April was a high.
Keep in mind that the desire to snatch bargains or take profits is always accompanied by doubt about whether the bottom or top is in. Among the safer ways to get bargains amid such doubt is to look for high dividend yields. With large companies that pay a steady dividend, a high yield shows the stock price to be on sale and probably near the lower end of its trend channel. Even if the stock drops farther, at least you’ll be compensated by the dividend while you wait for capital appreciation (the stock price to go up).
The following are some of my favorites from currently high-yielding stocks, chosen for their fat yields and potential for capital appreciation:
FE $34.60 First Energy 6.4% yield
EXC $37.88 Exelon 5.5% yield
PAYX $25.47 Paychex 4.9% yield
PFE $14.14 Pfizer 4.8% yield
FTE $17.80 France Telecom 4.7% yield
Disclosure: The Kelly Letter owns Pfizer, and added to its position last week at $14.
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I am a subscriber for a year and a half and well-pleased with your astute stock strategies, Jason, especially with our recent purchases of RIG & PFE – they are winners. What is a time range you speculate we may be holding them? I know that’s a tough one but your thoughts on a very broad short-term, long-term guesstimate would be much appreciated. I’m, also, contemplating your Exelon suggestion. I’ve owned it before; always a solid dividend and now, also, positioned nicely for appreciation.
Thanks for all the hard work you put in to making a very comprehensive and valuable newsletter – and at an incredibly affordable price.
Thank you, Paul. I expect to hold both of them for years, but will change that if we get a sudden run-up in the price of either one that makes it look worth using a trailing stop. I doubt that will happen, though. With dividend payers, waiting is half the fun!
You really should do your research, the real dividend yield on BX is not 10.7%, you would know that if you did more then use search tools and look at charts. Prior to the current fiscal year BX has a dividend payout policy which showed preferential treatment to Common Unit holders. Last year they paid $1.20 but under the current payout policy they would have only paid $0.48
Quote from the 10-K
“As previously disclosed, public common unitholders were entitled to a priority distribution of up to $1.20 per common unit per year ahead of Blackstone personnel and others regarding distributions made in respect of fiscal periods from July 1, 2007 through December 31, 2009. On December 31, 2009, that distribution priority ended and therefore all future distributions after the distribution referred to in the preceding paragraph will be made on the same basis among all holders of Blackstone Holdings partnership units (held by Blackstone personnel and others) and all holders of Blackstone common units (held by public unitholders and others). Had the distribution priority not been in effect in 2009 so that 2009 cash distributions were made to all unitholders on the same basis, the distributions to common unitholders in respect of fiscal 2009 would have been $0.48 per unit instead of $1.20 per unit.”
So the 10% figure your saying is backward looking, in finance we are concerned with what is going to happen in the future, so do a little homework.
Also BX is a MLP (Master Limited Partnership) meaning your not buying shares your buy “Common Units” in the partnership this could create problems for small investors who don’t know what they are doing because owning even 1 unit for 1 day will result in the need to file a K-1 on your federal tax return and report your portion of income and expenses in the partnership for the time you held it.
So please if your going to talk about how great you are do your homework, I’m certain your a great writer but if you going to write about finance you should try to be right.
You are correct, and I apologize to everybody for this. Even more egregious than not doing the research is that my own data show BX’s yield to be 4.3%. Tired eyes evidently looked to the yield history I also track, and inadvertently presented it as forward-looking. I removed BX from the list, so it will not show in this article from now on. For those wondering what this discussion is about, now that BX is no longer in the article, I initially showed the following at the top of the dividend ideas: BX $9.34 Blackstone 10.7% yield.
Gee J – You could have pointed out the error without being so rude and condescending.
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