Typically, investors are interested in one of two things - capital appreciation or income. When things fall into place an investor can locate a stock that pays a nice dividend and is primed for a run-up in its value. That is exactly what we will try and find for you in this article. Here are three dividend paying stocks currently riding momentum.
IN PICTURES: 9 Simple Investing Ratios You Need To Know
The first company on our list is movie theater owner Cinemark Holdings (NYSE:CNK). The stock has had a nice run since the end of the summer movie season, up 21% since the beginning of September. Cinemark's recent Q3 earnings only add more fuel to the fire as the firm posted revenues 13% greater than 2009 and earnings nearly 60% higher than the same quarter last year, beating Street estimates in the process. Management said that theater attendance rose a higher than expected 9% in the quarter, while average ticket prices and concession revenue increased 5% and 2% respectively.
One would expect business to continue to be strong as Cinemark theaters have been full for the recent blockbuster releases of the latest Harry Potter film along with DreamWorks' animated hit Megamind. The stock currently offers shareholders a 4.7% dividend yield and a reasonable PE of 13.5, noticeably lower than that of major competitor Regal Entertainment (NYSE:RGC).
Next on our list is a familiar name for those who have been frequenting the malls this season, Foot Locker (NYSE:FL). The footwear and sports apparel chain has been on fire in the past month, climbing over 20%, jumping 10% alone following better than expected second quarter earnings in early November. Foot Locker CEO Ken Hicks has been a busy man since leaving his post as President of J.C. Penney (NYSE:JCP) last September, closing down underperforming stores and trimming the workforce to streamline operations. His hard work seems to be paying off as his company's shares are up 60% since last October, and analysts are beginning to notice the company's success. Research firm Wedbush recently initiated an "outperform" rating on the stock. This comes as no surprise for those who follow the sporting apparel space, as Foot Locker's biggest competitor, The Finish Line (Nasdaq:FINL), reported disappointing results in its last quarter leading to a selloff to the tune of 11% following the news.
Going forward, Foot Locker should still be able to bank on strong demand for toning shoes which have become the "it" product in women's athletic gear. Add to all this a yield of 3.2% on the company's shares and Foot Locker looks like a winner.
Last, we look to the energy sector where we find one of the world's biggest oil & gas companies, Royal Dutch Shell (NYSE:RDS-A). Shell's stock price has closely followed the movements in crude oil in the past three months, but has outperformed when compared strictly to the spot price of oil, returning 19% in that time. Crude, as represented by the United States Oil Fund (NYSE:USO) has returned about 11.5% in that time. Royal Dutch Shell currently pays investors a 5.3% dividend yield and trades at a P/E inline with competitors like Exxon (NYSE:XOM) and Statoil (NYSE:STO), trading at 12.5-times earnings. With many market observers predicting strong oil prices for the coming months, Shell should be a solid play in this space as it has operations diversified across the globe and has a proven track record of cash flow generation to fund future projects.
The Bottom Line
For income investors looking for some capital appreciation in some of their investments, these three stocks look like good bets based upon the momentum they've been riding in recent weeks. (For more, see Riding The Momentum Investing Wave.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!