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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Merck, P&G and Other Dividend Stocks You Wish You'd Bought in 2013

NEW YORK (TheStreet) -- What a marvelous feeling to buy a stock and watch it rise in value.

I love checking my portfolio after I see a stock I own moving higher. Even more electrifying is when the stock is a dividend payer.

Historically, dividend stocks outperform non-dividend payers, but knowing which ones to buy is no easy task.

I spend a lot of time trying to help you avoid buying the dogs known as dividend traps. Dividend traps are the seemingly attractive high-yield, low-cost stocks that have a tendency to go even lower right after you buy them.

With careful research of sectors, costs in relation to earnings, technical analysis and spending time reading SEC filings, you can shift the odds.

Normally, I don't venture far from highly liquid names everyone knows. However, I'm finding other under-the-radar names that industry insiders know about, but the overall market doesn't. The potential gains are much greater if you're willing to sit and wait for others to discover the hidden value.

Of course, playing the waiting game isn't so tough when you're receiving checks in your mailbox every 90 days. SLP Chart

First is a stock you may see often because I'm tremendously excited about its income-generating ability. This is not the first time I've highlighted Simulations Plus (SLP), and I doubt it will be my last. The company is a California-based, $100 million (market cap) software firm with massive gross and net margins. It's debt free, and it's small enough that most have never heard of it or the products outside of the pharmaceutical industry.

Customers love the cost savings from using the software compared to actual laboratory research. The top 20 pharmaceutical companies in the world are customers. Simulations Plus is a leader in the simulation software space that counts the FDA and MHRA (U.K's equivalent of the FDA) as clients.

The stock doesn't offer enough liquidity to trade it, but for long-term investors preferring dividends over daytrading, its 3.4% yield is hard to beat. I wrote a Real Money Pro post with exact entries and profit targets, and I bought this one myself. SLP Revenue (Annual) Chart

From a cost of earnings perspective, the stock isn't expensive relative to its growth. The pharmaceutical space is in full merger mania, and I wouldn't be shocked if it spills over onto Simulations Plus. That said, the bull thesis doesn't require takeover speculation and I'm not betting on it.

Two analysts track Simulations Plus. Both share my opinion that the stock is a buy, but only one proffers a price target of $6.10.

During the last 12 months, the stock price has popped 52%.

1 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 16,919.59 +80.85 0.48%
S&P 500 1,981.60 +9.86 0.50%
NASDAQ 4,527.5140 +19.2020 0.43%

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