3 Nice Dividend Yields
Nikhil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Here are 3 Nice Dividends that could add some strong returns to your portfolio in the new year.
Aixtron SE (NASDAQ: AIXG)
Dividend Yield: 6.08% EPS Payout Ratio: 33.8%
With no debt and $4.71 per share of current assets over total liabilities, Aixtron's financial position is extremely safe. Not only that, but its business is strong, supported by a 32% ttm Return on Equity. After determining a strong financial position and business itself, we have to take account for the business's valuation to protect ourselves from price deterioration, which could cause capital loss.
At 14.35x FCFPS and 7.06xEPS, Aixtron is not overvalued by a ratio valuation. Technical analysis suggests that the range from 10-15 is a large support for AIXG, and there is a lot of potential upside possible. Note: I haven't actually checked in detail for the source of the 62% drop in the last year. It would be extremely important to check the reasons behind that as they aren't extremely evident in AIXG's financial statements. One place to check would be sources of revenue, as AIXG did have a bad recent quarter, not losing money, but not earning either.
KKR Financial Holdings (NYSE: KFN)
Dividend Yield: 8.16% EPS Payout Ratio:38.9%
KKR Financial Holdings is a financial company that invests in corporate debt and private equity. For this reason, it is a bit difficult to judge KFN's financial position by its leverage. It is important to note that if things go wrong, KFN does have a Debt/Equity ratio of 4.11, which could make things a lot worse for the company. KFN also has a 19.6% Return on Equity, but this again is misleading because of the large use of leverage to sustain returns. As a Financial, KFN dropped 20% at the onset of the US debt crisis and Eurozone debt crisis. Since then, it has recovered so it's only down 5.87% in the last year. Now to take account for valuation to avoid a capital loss.
At 9.3xFCFPS and 4.91xEPS, KFN is downright cheap by a ratio valuation. Technical analysis suggests that $7 per share is a huge support for KFN, and it has been gaining momentum recently. KFN is not for the risk averse, however, with a high beta and a TON of volatility. However, KFN's consistent dividends-stable or rising in each of the last 9 quarters-may be worth the volatility. Note that for a financial, KFN trades for below book value, making it a value play that could potentially bring in a lot of returns.
RadioShack Corporation (NYSE: RSH)
Dividend Yield:5.06% EPS Payout Ratio:42%
With $4.07 in Current Assets over Total Liabilities, RadioShack's financial position is extremely safe. While worries that the retailer is losing its customer base have pushed RSH's valuation to the floor, it isn't deserving of this low of a valuation as it continues to pour in the revenue. At this point, RadioShack is a mature company whose cash flow should be treated as such, and RSH is on track to produce more FCF this year than the last. In the last four quarters, RadioShack has a 14.6% Return on Equity, giving it a strong business and financial position to fall back on.
With $200M of FCF in the past 9 months, RadioShack is that much cheaper, sporting a P/9 Month FCF of less than 5. Trading at around 10x trailing earnings, investors should be in no danger of losing their money from an overvaluation of RadioShack.
These dividends should provide strong returns for income oriented investors. I hope you enjoyed them.
The Motley Fool owns shares of RadioShack. shamapant owns shares of KKR Financial Holdings LLC. 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.