This Day On The Street
Continue to site
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

If You Want Income, Consider Timber Stocks

NEW YORK ( TheStreet) -- Have you noticed how red-hot the timber sector is?

Timber stocks and real estate investment trusts have been in demand largely because they're seen as a play on the recovery of the housing market.

What's more, they pay big, fat, juicy dividends, which makes them attractive when Treasury bonds are yielding so little.

One timber REIT that has rewarded me in the past is Rayonier Inc. (RYN - Get Report), which was recently trading at $45.56, a couple of dollars less than its 52-week high of $47.56.

This is a profitable company that buys and develops real estate and manages timberland. It also produces and sells cellulose fibers in the U.S., New Zealand, and Australia.

This company plans to report second-quarter 2012 earnings on July 26, and it wouldn't surprise me if it met or exceeded analysts' expectations. Let's wait to buy in case it misses estimates, shall we?

As of the beginning of the year, Chairman and CEO Paul Boynton owned almost 269,000 shares, which have a current value of about $12.2 million. And as of July 1, chief administrative officer W. Edwin Frazer owned almost $9.9 million worth of shares.

So officers and directors are putting their money where their mouths are, and big investors such as Invesco Ltd. and The Vanguard Group each own more than 4% of the outstanding shares.

The stock pays a $1.60 annual dividend. Given the stock's current price, that translates into a 3.52% yield. Look at the one-year chart below, which shows both the stock's 200-day moving average and the Bollinger bands.

Chart courtesy of Yahoo! Finance

The 200-day moving average is right around $43, and the lower Bollinger band is near $42.

On June 13, 2012, the day after it paid its last quarterly dividend, it hit an intraday low of $42.46, and I have no reason to think it couldn't correct down to that level again.

If it does, the yield will rise 3.77% and you'll be buying shares of RYN at a 6.7% discount to where they closed Tuesday.

There are some other good names among the timber sector.

Potlatch Corporation (PCH - Get Report) is a REIT that owns and manages timberland in Arkansas, Idaho, Minnesota and Wisconsin.

It also produces lumber, plywood, and particleboard. This REIT is certainly tied to the housing-recovery theme.

PCH pays a $1.24-a-year dividend. At Tuesday's closing price of $33.72 that equates to a yield of 3.68%. Let's take a peek at its one-year chart, which shows the 200-day moving average and the Bollinger bands.

Chart courtesy of Yahoo! Finance
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
PCL $36.54 0.00%
PCH $34.89 0.00%
RYN $25.08 0.00%
WY $32.28 0.00%
AAPL $93.64 0.00%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs