High-Yield Stocks With Analyst Blessings
BOSTON (TheStreet) -- The stock market has rallied in 2010, but complacency could limit growth. Dividend-paying stocks currently offer a margin of safety. Here are three high-yield stocks that garner "buy" ratings from the majority of analysts who cover them.
3. Copano Energy
( CPNO) provides midstream services to natural gas producers, including processing, compression and transportation. Its stock yields 9.1% with a payout ratio of 633%. The board has increased distributions, which are taxed differently than dividends, each year since 2005.
Quarter
: Fourth-quarter net income decreased 36% to $7.5 million and earnings per share fell 48% to 11 cents. Revenue inched up 1%. The operating margin remained steady at 9%. Copano holds $45 million of cash and $853 million of debt, translating to a quick ratio of 1 and a debt-to-equity ratio of 1.
Stock
: Copano has advanced 81% during the past year, outperforming U.S. indices. It trades at a price-to-book ratio of 1.7 and a price-to-sales ratio of 1.8, 99% and 35% discounts to industry averages. Its PEG ratio, a measure of value relative to expected growth, of 0.7 signifies a bargain to buy-and-hold investors.
Consensus
: Of analysts following Copano, five, or 56%, advise purchasing its shares and four recommend holding them.
Ladenburg Thalman
(LTS) - Get Ladenburg Thalmann Financial Services Inc. Report
expects the stock to advance 14% to $29, the loftiest price target.
RBC
(RY) - Get Royal Bank of Canada Report
predicts the stock will hit $26 and
UBS
TheStreet Recommends
(UBS) - Get UBS Group AG Report
says it will climb to $25.50.
Holders
: Five of Copano's 10-largest holders, including
Bank of America
(BAC) - Get Bank of America Corp Report
and UBS, increased their holdings during the fourth quarter. Three, including
Fidelity Management
, reduced their holdings and three positions remained the same.
2. Linn Energy
(LINE)
is an independent oil and gas company that acquires and develops properties in the United States, primarily in Texas and California. Its stock yields 9.7%. The company has suffered losses in three of the past four quarters.
Quarter
: Linn swung to a fourth-quarter loss of $65 million, or 52 cents, from a profit of $889 million, or $7.76, a year earlier. Revenue plummeted 92%. The operating margin fell from 85% into negative territory. Linn has $22 million of cash and $1.6 billion of debt, converting to a debt-to-equity ratio of 0.6.
Stock
: Linn has soared 77% during the past year, outpacing U.S. indices. The stock sells for a price-to-book ratio of 1.4 and a price-to-cash-flow ratio of 8, 99% and 18% discounts to industry averages. It's expensive based on projected earnings and sales. It has dropped 9% a year since 2007.
Consensus
: Of analysts covering Linn, five, or 83%, rate its stock "buy" and one rates it "hold."
Raymond James
(RJF) - Get Raymond James Financial, Inc. Report
and
Barclays
(BCS) - Get Barclays Plc Report
project a share price of $30, a potential 15% gain.
Citigroup
(C) - Get Citigroup Inc. Report
predicts the stock will hit $28.50.
Wells Fargo
(WFC) - Get Wells Fargo & Company Report
rates Linn Energy "market perform."
Holders
: Five of Linn's 10-largest shareholders, including
Morgan Stanley
(MS) - Get Morgan Stanley Report
and
JPMorgan Chase
(JPM) - Get JPMorgan Chase & Co. Report
, increased their positions during the fourth quarter. Four lessened their holdings and one maintained the size of its position. Linn has fallen 4.4% during the past month, trailing major benchmarks.
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Top 10 Dow Dividend Stocks |
1. Chimera Investment
(CIM) - Get Chimera Investment Corporation Report
is a real estate investment trust, or REIT, that invests in residential mortgage-backed securities and asset-backed securities. Its stock yields 17.4% with a payout ratio of 99%. REIT distributions are taxed differently than dividends.
Quarter
: Fourth-quarter profit rose tenfold to $95 million, or 14 cents, as revenue quadrupled to $101 million. Chimera's gross and operating margins extended from 83% to 89%. Its balance sheet stores $45 million of cash and $2.4 billion of debt, translating to a debt-to-equity ratio of 1.1.
Stock
: Chimera has risen 25% during the past year, underperforming indices. The stock trades at a price-to-earnings ratio of 6.6, a price-to-projected-earnings ratio of 6.1 and a price-to-book ratio of 1.2, 95%, 91% and 42% discounts to industry averages. It's expensive based on sales and cash flow.
Consensus
: Of firms rating Chimera, five, or 63%, recommend buying its shares and three advise holding them.
Sterne, Agee & Leach
believes the stock will appreciate 34% to $5.25.
Deutsche Bank
(DB) - Get Deutsche Bank AG Report
thinks it will hit $5 and
Keefe, Bruyette & Woods
(KBW)
expects it will rise to $4.
Holders
: Seven of Chimera's 10-largest shareholders, including
BlackRock
(BLK) - Get BlackRock, Inc. Report
and
Vanguard
, purchased additional shares during the fourth quarter. Three sold a portion of their holdings. Chimera has fallen 2.2% during the past four weeks, lagging behind major benchmarks on fears of interest rate increases.
-- Reported by Jake Lynch in Boston.
