NEW YORK ( TheStreet) -- Don't you just love dividend-paying stocks? You buy one and like magic they start sending you thank-you notes in the form of dividend payments.
Non-dividend stocks never send you thank-you letters. You may receive a letter from a class-action lawyer once in a while trying to shake down the company for a few dollars, but that's usually about it.
The only thing better than buying a high-yielding stock is buying a high-yielding stock on sale. The market is a fantastic place to find sales. We have to be extra careful buying stocks on sale, though. There's usually a reason people are selling but if you're willing to wait and be selective, fantastic deals abound.
Background: Potash Corporation of Saskatchewan, together with its subsidiaries, produces and sells fertilizers and related industrial and feed products primarily in the United States and Canada. I could certainly have fun with this name, especially after writing "Why Weed Isn't Legal and May Never Be", but I will stick to the investment thesis. Potash gapped lower the last day of trading in July after a Russian producer ended its distribution contract with Belarus. Belarus is the biggest player in the global potash space, and effectively controlled the market the way De Beers (the good folks who brought us "A diamond is forever") controls the diamond market. Instead of $800 of more per ton for potash, the fertilizer is worth about half that now. Lower prices result in lower profits for Potash. The good news for you is the dust settled and the market fully priced in the price change. Also, that's one less risk hanging over investors' heads that is now effectively removed. Earnings Payout Percentage: 33% After the sell-off, the yield jumped to 4.7%, bringing it to my attention. I waited until the shares found support, and now it's relatively safe to stick your big toe in the water. The average analyst target price for Potash is $37.93. Don't let a downgrade and/or lower price target announcement alarm you. A $3 or $4 price target reduction should have near zero impact based on the already-discounted shares. The last reported short interest is paltry and without reason to consider it a meaningful influence at only 2% of the average trading float. POT Payout Ratio TTM data by YCharts