5 High Dividend Stocks Insiders Are Bullish About
Meena is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
A number of investors find high dividend yields attractive, either because they like the commitment to shareholder value that high dividends represent or because they are investing at least in part to receive a stable income from dividend payments. At Insider Monkey, we like to follow insider transactions with the knowledge that insider purchases tend to be a bullish sign for a stock. While insider buying does not guarantee that the company will not struggle in the near future (causing the stock price to fall and potentially endangering dividend payments), it is still a good factor to watch. Using data from Fidelity as well as our own data on insider transactions, here are five stocks which have seen insider buying in the last six months and pay high dividend yields:
Leading our list of suggestions is Pitney Bowes (NYSE: PBI). Pitney Bowes is a $2.7 billion market cap company which provides mail services to businesses. Its stock price has fallen 29% year to date, hitting $13 in mid-May. It was shortly after that point- at prices generally between $13.50 and $13.70- that we recorded a number of insider purchases (see insider purchases at Pitney Bowes). The company has generally been keeping its dividend payments constant or even increasing them the past few years, and based on what it has been paying in the past and the current stock price its dividend yield at this time is 11.2%.
Windstream (NASDAQ: WIN), an American-based company providing broadband and other telecom services, has also seen considerable insider buying recently. One Board member has purchased over 10,000 shares since the beginning of August, and another bought 13,000 shares in June. Like at Pitney Bowes, these insiders are buying a down stock: Windstream has recovered from its lows in early June but is still down 15% on the year. The fall in the stock price, combined with an unchanged-since-2006 dividend payment of 25 cents per share, has resulted in a dividend yield of 10%.
A variety of insiders, including both Board members and company officers (such as the COO), have bought shares of Frontier Communications (NASDAQ: FTR) since the middle of May (research insider buying at Frontier). Frontier, known as Citizens Communications until 2008, is a $4.8 billion market cap telecom company which serves residential and business customers. Its revenues and earnings were down last quarter compared to a year earlier, and its stock price has suffered accordingly (down 19% in the last 52 weeks); as a result, its dividend yield going by what the company has paid recently has risen to 8.3%. It should be noted, however, that current dividend payments are down 60% from the summer of 2010 and could be cut further.
Aldo Zucaro, CEO of insurance underwriter Old Republic International Corporation (NYSE: ORI), bought shares of his company in late July through early August; other insiders at the company bought in July and May. See our history of Zucaro's insider purchases. Old Republic pays a 7.3% dividend yield, after increasing its dividend payment earlier this year for the third year in a row. The company is unprofitable on a trailing basis, but trades at 16 times analyst consensus for 2013 and saw its revenue rise 12% in its most recent quarter versus a year ago.
We have also recorded insider purchases at Cliffs Natural Resources (NYSE: CLF), which provides iron ore and metallurgical coal, including 4,500 shares- representing a value of about $270,000- by a company officer in May. A slump in the industry has driven the stock price down 33% in the last year, but the dividend has actually grown and an investment in the stock now yields 6.2%. The trailing P/E multiple of 4 is also low, but this and the high yield reflect market skepticism of the company. Its revenue and earnings both fell at a double-digit rate in the second quarter compared to the same period in 2011.
Know What You Own
When it comes to dividend yields, you won't find many higher than Frontier Communications. While its juicy dividend is tempting, every Frontier investor has to understand that it's not a sure thing. A huge acquisition has transformed the company forever. Will the move bear fruit, or are investors destined for another disappointing dividend cut? In this premium research report on Frontier Communications, Fool analysts walk you through all of the key opportunities and threats facing the company. Better yet, you'll receive a full year of updates to boot. Click here to learn more.
This article is written by Matt Doiron and edited by Meena Krishnamsetty. Meena has a long position in FTR. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.