4 High-Yielding Dividend Mid-Caps to Consider
Robert is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Stock research is often contained at either end of the market value spectrum. Most investors know the benefits of both large caps and small cap stocks. Large firms provide stability through economies of scale, established business models, and high dividends, whereas their tinier counterparts have more room to grow and the potential for greater returns. However, there exists a middle ground where many of America’s profitable businesses can be found: mid-caps. Here are four publicly-traded stocks with market capitalizations between $1 billion and $8 billion that yield at least 3.5% at recent prices.
GameStop (NYSE: GME) is a retailer of new and used video games and video game accessories. The company carries a $3 billion market capitalization. GameStop is a new entrant into the dividend-paying stock category, having announced its first payout one year ago. However, the company increased its dividend by a robust 67% after only two quarterly payments. At recent prices, the stock yields 4%. Shares trade for a forward price-to-earnings ratio of 7.5, perhaps struggling to overcome the notion that brick-and-mortar retailers are the modern-day buggy whip business.
Speaking of struggling brick-and-mortar retailers, there is perhaps no better example than Best Buy (NYSE: BBY). Falling sales have caused a dramatic decline to this company’s stock price. Trading well over $40 as recently as early 2011, the stock now trades in the teens. Shares of Best Buy have been particularly volatile recently, on news that its founder and CEO wants to take the company private. What hasn’t been nearly as volatile is the company’s solid dividend track record: the company has raised its dividend 5.5% compounded annually over the last five years and currently yields 4.2%.
Hasbro (NASDAQ: HAS) is a $5 billion, U.S.-based toy manufacturer. Hasbro has a product portfolio that most consumers would easily recognize: games including Monopoly and Scrabble, and toy brands including Nerf and G.I. Joe. Hasbro has had a bumpy ride the last two years. The stock reached a high of almost $50 per share in late 2010, only to drop steadily since, to its current level of $37. The company’s dividend, on the other hand, tells a much better story about the company. Hasbro has increased its dividend 8 times since 2004, each time raising the payout by at least 20%. The stock yields just under 4% at current prices.
H&R Block (NYSE: HRB) is a $6 billion tax preparer operating in the United States. The stock has had a great run the last couple years. The share price increased 13% in 2012, and has run up more than 20% since the start of 2013 already. H&R Block pays an annualized dividend yielding 3.5% at recent prices. H&R Block has done well to stabilize its business: revenues over the first six months of the company’s fiscal year increased slightly less than 2%.
The Bottom Line
These well-known businesses, each with market values roughly between $1 billion and $8 billion, have the potential to offer the best of both worlds: better growth rates arising from a smaller starting point, as well as successful businesses that pay sizable dividends to shareholders.
Robert Ciura has no position in any stocks mentioned. The Motley Fool recommends Hasbro. The Motley Fool owns shares of GameStop and Hasbro. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!