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Dividend Stocks From a Top Money Manager

James Altucher

One of the professional portfolios that sports the maximum four-star rating is Cutler Capital, a money management firm that has returned 78% over the last three years. The firm specializes in income-oriented investments including convertible bonds, real estate investment trusts (REITS) and preferred stocks.

As many investors shift toward income investments, Cutler Capital's stocks are worth examining. The portfolio was updated last week.

One of the highest-yielding stocks that Cutler owns is American Financial Realty Trust(AFR), a REIT with an interesting niche. The company leases buildings primarily to financial institutions, such as banks and credit unions. The company is planning to merge with Gramercy Capital(GKK) and has set a special shareholder meeting for Feb. 13 to vote on the $1.1 billion deal. The stock has a price-to-earnings (P/E) ratio of 58, a P/E-to-growth (PEG) ratio of 2.3, and it pays a high yield of 9.5%.

American Financial is also part of the WisdomTree SmallCap Dividend ETF, an exchange-traded fund that tracks dividend-paying small-cap stocks. Other stocks in this ETF include Nationwide Health Properties(NHP), which yields 6.4%, Newcastle Investment(NCT), which yields a very high 21.1%, and Entertainment Properties Trust(EPR), which pays 6.4%.

Lexington Realty Trust(LXP) is another REIT stock owned by both Cutler and the WisdomTree ETF. Lexington offers a yield of 9.4%.

Another high-yielding stock held by Cutler is Regions Financial(RF), an Alabama-based bank holding company that yields 6.3%. JPMorgan recently initiated coverage of the stock with a neutral rating. The stock has a P/E of 11 and a PEG of 1.37.

Regions is also held by the Allianz NFJ Dividend Value Institutional Fund, which is rated five stars by Morningstar and has generated an average annual return of 17.2% over the last five years. The Allianz fund also owns GlaxoSmithKline(GSK), which pays a yield of 4.2%, Dow Chemical(DOW), with a 4.1% yield, and Seagate Technology(STX), which pays 1.5%.

Another notable Cutler-owned stock is Whitney Holding(WTNY), a New Orleans-based bank holding company that yields 4.6%. The company last month announced that it will buy back up to 4 million of its own shares. The stock has a P/E of 11 and a PEG of 1.4.

Whitney also appears in Bank Takeover Candidates, a Stockpickr portfolio that includes several banks that Jim Cramer has suggested could be takeover targets for large Canadian or Spanish banks. Other stocks on the list include Commerce Bancorp (CBH), which yields 1.4%, and First Horizon National(FHN), with a yield of 9.7%.

For more of Cutler's stockholdings, check out the Cutler Capital portfolio at Stockpickr.com.