This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

3 High-Yield Stocks to Counter U.S. Downgrade

Stocks in this article: LTDDONPK

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

1. National Presto (NPK) has gone largely unnoticed, though, it ranks among the best small-cap dividend stocks. However, with a market value of $738 million, Presto is a little-discussed company, manufacturing small appliances, such as toasters and pressure cookers, defense products, including ammunition, and absorbent products, including diapers. Such a wide variety of seemingly unrelated products has yielded tremendous consistency. Presto has grown sales and net income 4.4% and 18%, annually, on average, over a three-year span.

No sell-side analysts cover Presto's stock, which has delivered annualized gains of 29% since 2008, but has corrected 6.2% in the past 12 months and is down 17% year-to-date. It's now fallen to attractive levels, based on peer valuation and dividend potential, trading at a trailing earnings multiple of 11, a forward earnings multiple of 10 and a book value multiple of 2.1, indicating respective discounts of 41%, 32% and 62% to industry averages. Presto has been ranked "buy" by the quantitative equity model, used by TheStreet Ratings, since April of 2009. It has returned 51% since then, excluding distributions, which are lofty.

Presto pays its dividend at the end of each calendar year, declaring a regular payment and a special dividend on top. Since most screeners don't account for special dividends, it appears that Presto offers a paltry yield of 0.9%, which only accounts for the annual $1 payment from the company. In reality, the yield is upwards of 7%. The distribution has grown 25% and 31%, annually, over a three- and five-year span, respectively. The payout has steadily climbed from $2.45, in 2008, to $7.25, in 2011. The last dividend translated to a yield of 6.3% upon declaration. Presto has an ideal financial position, with $151 million of cash and no debt, for an ample quick ratio of 3.6.

-- Written by Jake Lynch in Boston.

RELATED STORIES:

Become a fan of TheStreet on Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
4 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,614.81 +215.14 1.31%
S&P 500 1,941.28 +37.27 1.96%
NASDAQ 4,419.4780 +103.4040 2.40%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs