Equity analysts are busy at work estimating earning for upcoming quarters, creating financial models to attain the value of covered stocks, produce research reports regarding economic conditions and companies, and make investment recommendations based on their findings.
Since most everyday investors do not have the analytical know-how or even the time to perform their own stock analysis, analyst recommendations are often used as a guide to determine which stocks should be bought or sold. Here we look at seven stocks that carry a buy or strong buy rating and pay investors a considerable dividend.
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|Activision Blizzard (Nasdaq:ATVI)||1.26 %|
|Banco Santander (NYSE:STD)||5.94%|
|CMS Energy Corp (NYSE:CMS)||3.80%|
|ING Group (NYSE:ING)||Suspended|
|KKR Financial Holding (NYSE:KFN)||3.30%|
|Linn Energy (Nasdaq:LINE)||9.61%|
|Service Corp. (NYSE:SCI)||1.67%|
Activision Blizzard, the makers of famous titles such as "Call of Duty: Modern Warfare" and "World of Warcraft" has had two of the best games in the last year, with "Call of Duty" greatly exceeding sales expectations. Although analysts are skeptical of the video game consumer spending environment, software add-ons to "Modern Warfare" are expected to boost Acitivision's bottom line profits beyond those of its competitors.
Despite the turmoil surrounding Greece and the European Union, in addition to the recent accusations against American investment banking giant, Goldman Sachs, the Spanish bank, Banco Santander is expected to outperform the overall market. Year to date, this stock has lost nearly 14% of its value, largely as a result of the the rise in bad loans within the Spanish market. However, the average target price of STD stands at $16.99.
Utility stocks are generally known to implement higher dividend yields than shares in other sectors. CMS Energy currently yields 3.8%, slightly below the industry, which carries an average yield of 4.48%, but well above the 1.46% yield of the S&P 500. Overall, utility stocks remain a fairly risky investment due to the high level of uncertainty regarding future demand levels.
Dutch global financial services giant ING has been hit hard during the 2008-2009 credit freeze as income from insurance operations decreased from 62 million euros in 2007 to 35.8 million euros in 2009. Currently, the stock is trading at fairly low multiples and may offer investors substantial capital gains as the corporation returns to its previous state of profitability. ING has temporarily suspended their dividend payments due to current market conditions and will only resume payouts when such actions are deemed appropriate by the Executive Board.
Kholberg Kravis Roberts & Co. has a dynamic portfolio with big names such as Dollar General (NYSE:DG), Kodak (NYSE:EK), Legg Mason (NYSE:LM) and Sealy (NYSE:ZZ). The private equity market has been fairly stale this year with many IPOs being postponed until market conditions improve. KKR is reportedly planning three major IPOs, one of which includes well-known retailer Toys R Us. A $1.15 billion IPO of Dutch semiconductor manufacturer NXP was recently announced.
Oil & Gas
Linn Energy, when compared to the remainder of the oil and gas industry, operates with significantly larger gross margins, although this may be due to its excessive use of leverage. While the industry has an average debt to equity ratio of 0.1436 LINE operates with a multiple of 0.648. The company is expanding quickly, and acquired oil and gas properties in Texas and Michigan in the last month.
Service Corporation is a U.S. death care product and service provider, which extends its operations to provide funeral services in Puerto Rico and Germany. Perhaps due to the growing elderly population, SCI shares maintain a strong buy recommendation from analysts. Service Corporation recently received clearance to acquire Keystone North America, another funeral service provider.
This list of dividend stocks is composed of a wide range of industries, making it possible for you to choose the one that will best diversify your portfolio. In fact, the only thing the aforementioned stocks have in common is that they are praised by analysts and offer sizable dividends. Take your pick! (For more stock analysis, take a look at America's Top Dividend-Paying Stocks.)
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