High-Yield Stocks You've Never Heard Of
James Altucher
06/13/07 - 06:39 AM EDT
It seems that the demand for high-yield stocks, especially ones you've
never heard of, is larger than we over at Stockpickr had expected. Jim
Cramer mentioned on a video with me yesterday that he has a new
technique: he likes to find stocks every day that even he's never
heard of. He also mentioned he specifically uses Stockpickr to find
these ideas. With that in mind, we set up the portfolio
Even More High Yielding Stocks You've Never Heard
Of.
There are plenty of relatively unknown names out there that pay a
decent yield of more than 5% and that, in addition, can provide growth
potential. A few weeks ago, we wrote about and created our
first portfolio of high-yielding stocks you've never
heard of. These two portfolios also provide a nice complement to
top 100 stocks paying monthly dividends as well as
the portfolio set up by TheStreet.com ratings team of
Top Rated Dividend Stocks.
The first stock on our new list is
IndyMac Bancorp(IMB Quote), which is a mortgage bank holding company based in Pasadena, Calif. The stock has a price-to-earnings ratio of less than eight times, with a yield of 6%. IndyMac has paid quarterly dividends for over 10 years.
The stock was recently added to the portfolio of the
T. Rowe Price Mid-Cap Value Fund. The fund, with a Morningstar rating of five stars, is managed by David Wallack and has a three-year average annual return of 19.5%. This is one of the short-sellers' favorite stocks, but it's also one that has stabilized over the last few months.
Next on the high-yield list is
TAL International Group(TAL Quote), a New York-based company involved in the leasing and sale of intermodal equipment throughout the world. The stock trades for just eight times cash flow and has a yield of 5.8%. It pays out dividends quarterly, although with a short track record.
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Which high-yield, under-the-radar names are you
interested in currently?
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Bruce Berkowitz, founder of the Fairholme Fund (FAIRX), recently added TAL International Group to his portfolio. Fairholme believes in a focused approach to investing, so the portfolio has low turnover rates. It was designed that way because Berkowitz believes that the more companies you own, the more difficult it is to understand all of them. Other favorite plays of Berkowitz include
Berkshire Hathaway(BRKA Quote) and
EchoStar Communications(DISH Quote). He was nominated by Morningstar as Domestic Stock Manager of the Year for 2006.
Another high-yield play is
Seaspan(SSW Quote). Although the company is based in the Marshall Islands, it owns and operates deep-sea container transportation shipping vessels in Hong Kong. It has been paying dividends quarterly for the past seven quarters, and the stock currently yields 6% -- making it a component of our list of the
Highest-Yielding BRIC Stocks, which includes the highest-yielding plays from Brazil, Russia, India and China.
Seaspan has a P/E of 25, but quarterly earnings growth was up 66% year over year on similar revenue growth.
Investor's Business Daily recently made the company part of its
10 Top-Rated Dividend-Paying Stocks list of companies with solid dividends and healthy fundamentals. Other names on the list include
Southern Copper(PCU Quote) and
Excel Maritime Carriers(EXM Quote).
Also, Seaspan recently agreed to expand its borrowing limit to $1.3 billion in order to help expansion efforts. CEO Gerry Wang noted that the amended credit facility will help the company expand its fleet and manage its capital structure, as well as pursue acquisitions going forward. One last thing to consider is that retailers have drawn down inventories in recent months, so a buildup could come soon -- leading to a strong second half of the year for containership companies.
First Commonwealth Financial(FCF Quote) is a bank holding company based in Pennsylvania that yields 6% and has a P/E of 15. It pays its dividends quarterly and has increased dividends every year for the last 15 years. That has earned the company a spot in the
Consistent Dividend Growth portfolio on Stockpickr.
First Commonwealth was recently highlighted here on
TheStreet.com as one of the "
10 Banks With the Biggest Payouts." The company also approved a 1 million-share buyback. While that may not do much for the stock -- it only equals 1.5% of outstanding shares -- the board of directors symbolically said to the Street that it believes its stock is cheap.
Additional
high-yield unknown stocks can be found at Stockpickr. Also, check out our portfolio of
top dividend stocks you've never heard of, Part I. We have excluded closed-end funds, REITs, oil royalty trusts and limited partnerships from this list.
