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It's been a while since we have liked many names in the financial sector arena. We have basically been positive only on
and that has been a great name to own.
The turbulence we have seen this week in the markets may have been the peak in media coverage. The
) battle of letting them die or saving them rippled hard through many other financial stocks.
Then we had short-selling in the news. Time to enforce the rules, many cried. Many market bottoms occur with short-covering rallies. Why would you ever want to lose that?! What we do think is bad is the spreading of the false rumors to drive stocks down. That needs to be stopped.
This week's bounce in many names is creating opportunities for some to sell into the rallies. Some of these financial institutions that need capital should do it now. We even think that some companies should cut their dividends. That would actually make us even more excited about names like
Bank of America
for a second time.
As long-term investors, we want to see the stocks survive and make us big returns, similar to what happened in the early 1990s. Let's get right into the names we are looking to scale into on pullbacks:
: This company did the unthinkable and raised its dividend this week. The market loved it, and the stock has had a big jump. We would be buyers of the name under $25. This would give investors a 5%-plus dividend. Great place to start for long-term investors.
: Another company that surprised analysts with some better-than-expected news. This stock would be a nice buy in the low $60s. The dividend yield is close to 5%.
MasterCard: Great name, but a name that we would be bigger buyers of in under $250. For new buyers, we would start scaling in slowly below $250. Still a great name. Not much of a dividend play, but in the low-mid $200s, you're paying 20 times earnings. We'd sleep better at night buying it there.
: The broker king is at eight times earnings. Historically, investors have had to pay 16 to 20 times earnings to own the name. Scale (buy a little at a time) in to this stock.
: The company gave us a decent quarter and made us feel a lot better. The company didn't raise the dividend, but said it would as things get better. The stock reaction was what we like a lot as well. Scale into the name under $40.
These are heavily traded names that many investors have been asking us about. These are our favorite names of the bunch so far. We would start buying these names before names like Bank of America,
. Names that still scare us are
, Fannie Mae, Freddie Mac, Merrill Lynch,
Be sure to visit our complete
recommended list of the Best Dividend Stocks
as well as a
detailed explanation of our ratings system
At the time of publication, the authors had no positions in stocks mentioned, although positions may change at any time.
Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.