NEW YORK (TheStreet) -- Investors seeking long term gains should consider high-yield, low-beta companies with minimal debt such as AstraZeneca (AZN), Fifth Street Finance (FSC), Potash Corp. of Saskatchewan (POT) and HollyFrontier (HFC) that have proven to be the most rewarding holdings for extended periods.
Every aspect of a publicly traded company is a tell for investors.
But a high dividend yield combined with low beta and minimal debt show much more to investors than the others. The payment of a dividend is a show of strength. It demonstrates in the most meaningful way possible for investors that the funds dedicated to the dividend are not necessary for the firm to maximize shareholder value. A dividend that is above the average of about 1.9% for a member of the S&P 500 is even more of a positive indicator.
This can be found with AstraZeneca, a British drug maker with a dividend yield of 4.97%. HollyFrontier is an independent oil and gas refiner with a dividend gushing at 4.36% for its shareholders. The world's largest fertilizer company, Potash of Saskatchewan, is off due to a commodity slump, but still pays a dividend of 4.55%. Each of those firms has the cash flow to finance future dividend payments.
Fifth Street Finance, a business development company, has a dividend of more than 12%. High dividends are the norm in that industry, as covered in a recent article on The Street. Fifth Street Finance, now around $9.10 per share, is down in recent market action. However, the stock was rated a buy on Nov. 27 by UBS, with a target price of $10.50.
As detailed in another article on TheStreet, a study by Russell investments found that low beta stocks, those that move up and down in price less than the market as a whole, have the highest long term returns. With these, investors can enjoy high returns from low-risk stocks. For investors, there is no reason to sell an equity that is performing well; that leads to a lower beta. Buying and holding stocks that few owners choose to sell has proven to be a profitable strategy for investors with a long term horizon.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV